Correlation Between Amazon and Goldman Sachs

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Can any of the company-specific risk be diversified away by investing in both Amazon and Goldman Sachs 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 Amazon and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Goldman Sachs Group, you can compare the effects of market volatilities on Amazon and Goldman Sachs 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 Amazon with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Goldman Sachs.

Diversification Opportunities for Amazon and Goldman Sachs

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Amazon and Goldman is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group and Amazon 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 Amazon Inc are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Group has no effect on the direction of Amazon i.e., Amazon and Goldman Sachs go up and down completely randomly.

Pair Corralation between Amazon and Goldman Sachs

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Goldman Sachs. In addition to that, Amazon is 2.4 times more volatile than Goldman Sachs Group. It trades about -0.02 of its total potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.03 per unit of volatility. If you would invest  36,020  in Goldman Sachs Group on September 8, 2022 and sell it today you would earn a total of  271.00  from holding Goldman Sachs Group or generate 0.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Goldman Sachs Group

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Goldman Sachs Group 
Goldman Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Goldman Price Channel

Amazon and Goldman Sachs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Goldman Sachs

The main advantage of trading using opposite Amazon and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.
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The idea behind Amazon Inc and Goldman Sachs Group 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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Check out your portfolio center. 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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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