Correlation Between Goldman Sachs and Disney

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

Diversification Opportunities for Goldman Sachs and Disney

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Goldman and Disney is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Group are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Disney go up and down completely randomly.

Pair Corralation between Goldman Sachs and Disney

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.9 times more return on investment than Disney. However, Goldman Sachs Group is 1.11 times less risky than Disney. It trades about 0.07 of its potential returns per unit of risk. Walt Disney is currently generating about 0.0 per unit of risk. If you would invest  19,892  in Goldman Sachs Group on May 18, 2022 and sell it today you would earn a total of  15,605  from holding Goldman Sachs Group or generate 78.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Goldman Sachs Group  vs.  Walt Disney

 Performance (%) 
       Timeline  
Goldman Sachs Group 
Goldman Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Goldman Sachs reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Price Channel

Walt Disney 
Disney Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward indicators, Disney reported solid returns over the last few months and may actually be approaching a breakup point.

Disney Price Channel

Goldman Sachs and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Goldman Sachs and Disney

The main advantage of trading using opposite Goldman Sachs and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.
The idea behind Goldman Sachs Group and Walt Disney 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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