Correlation Between GOLDMAN SACHS and First National

Can any of the company-specific risk be diversified away by investing in both GOLDMAN SACHS and First National 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 First National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOLDMAN SACHS CDR and First National Financial, you can compare the effects of market volatilities on GOLDMAN SACHS and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDMAN SACHS and First National.

Diversification Opportunities for GOLDMAN SACHS and First National

0.85

Correlation Coefficient

GOLDMAN SACHS  First National

Very poor diversification

The 3 months correlation between GOLDMAN and First is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CDR and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial 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 CDR are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of GOLDMAN SACHS i.e., GOLDMAN SACHS and First National go up and down completely randomly.

Pair Corralation between GOLDMAN SACHS and First National

Assuming the 90 days trading horizon GOLDMAN SACHS is expected to generate 1.65 times less return on investment than First National. But when comparing it to its historical volatility, GOLDMAN SACHS CDR is 1.35 times less risky than First National. It trades about 0.2 of its potential returns per unit of risk. First National Financial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,720  in First National Financial on May 14, 2025 and sell it today you would earn a total of  1,098  from holding First National Financial or generate 29.52% return on investment over 90 days.

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

GOLDMAN SACHS CDR  vs.  First National Financial

GOLDMAN SACHS CDR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDMAN SACHS CDR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GOLDMAN SACHS displayed solid returns over the last few months and may actually be approaching a breakup point.

First National Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First National displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOLDMAN SACHS and First National

The main advantage of trading using opposite GOLDMAN SACHS and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDMAN SACHS position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.

The idea behind GOLDMAN SACHS CDR and First National Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.