Correlation Between Goldman Sachs and Scout E

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Scout E at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Goldman Sachs and Scout E into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldman Sachs Bond and Scout E Bond, you can compare the effects of market volatilities on Goldman Sachs and Scout E and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Goldman Sachs with a short position of Scout E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Scout E.

Diversification Opportunities for Goldman Sachs and Scout E

0.85

Correlation Coefficient

Goldman Sachs  Scout E

Very poor diversification

The 3 months correlation between GOLDMAN and Scout is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Bond and Scout E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scout E Bond and Goldman Sachs is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Goldman Sachs Bond are associated (or correlated) with Scout E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scout E Bond has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Scout E go up and down completely randomly.

Pair Corralation between Goldman Sachs and Scout E

Assuming the 90 days horizon Goldman Sachs is expected to generate 1.93 times less return on investment than Scout E. In addition to that, Goldman Sachs is 1.02 times more volatile than Scout E Bond. It trades about 0.05 of its total potential returns per unit of risk. Scout E Bond is currently generating about 0.1 per unit of volatility. If you would invest  1,056  in Scout E Bond on February 1, 2025 and sell it today you would earn a total of  24.00  from holding Scout E Bond or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Goldman Sachs Bond  vs.  Scout E Bond

Goldman Sachs Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Bond are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Scout E Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scout E Bond are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Scout E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Scout E

The main advantage of trading using opposite Goldman Sachs and Scout E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Scout E can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Scout E will offset losses from the drop in Scout E's long position.

The idea behind Goldman Sachs Bond and Scout E Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.