Correlation Between Goldman Sachs and PennyMac Finl

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and PennyMac Finl 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 PennyMac Finl 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 PennyMac Finl Svcs, you can compare the effects of market volatilities on Goldman Sachs and PennyMac Finl 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 PennyMac Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and PennyMac Finl.

Diversification Opportunities for Goldman Sachs and PennyMac Finl

0.27

Correlation Coefficient

Goldman Sachs  PennyMac Finl

Modest diversification

The 3 months correlation between Goldman and PennyMac is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and PennyMac Finl Svcs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Finl Svcs 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 PennyMac Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Finl Svcs has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and PennyMac Finl go up and down completely randomly.

Pair Corralation between Goldman Sachs and PennyMac Finl

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.75 times more return on investment than PennyMac Finl. However, Goldman Sachs Group is 1.33 times less risky than PennyMac Finl. It trades about 0.29 of its potential returns per unit of risk. PennyMac Finl Svcs is currently generating about 0.0 per unit of risk. If you would invest  55,678  in Goldman Sachs Group on May 5, 2025 and sell it today you would earn a total of  15,279  from holding Goldman Sachs Group or generate 27.44% return on investment over 90 days.

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

Goldman Sachs Group  vs.  PennyMac Finl Svcs

Goldman Sachs Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

PennyMac Finl Svcs

Risk-Adjusted Performance

Very Weak

Over the last 90 days PennyMac Finl Svcs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PennyMac Finl is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Goldman Sachs and PennyMac Finl

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

The idea behind Goldman Sachs Group and PennyMac Finl Svcs 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.