Correlation Between Goldman Sachs and Riot Blockchain

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

Diversification Opportunities for Goldman Sachs and Riot Blockchain

0.94

Correlation Coefficient

Goldman Sachs  Riot Blockchain

Almost no diversification

The 3 months correlation between Goldman and Riot is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Riot Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riot Blockchain 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 Riot Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riot Blockchain has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Riot Blockchain go up and down completely randomly.

Pair Corralation between Goldman Sachs and Riot Blockchain

Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 1.09 times less return on investment than Riot Blockchain. But when comparing it to its historical volatility, Goldman Sachs Group is 2.89 times less risky than Riot Blockchain. It trades about 0.12 of its potential returns per unit of risk. Riot Blockchain is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,096  in Riot Blockchain on August 18, 2024 and sell it today you would earn a total of  141.00  from holding Riot Blockchain or generate 12.86% return on investment over 90 days.

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

Goldman Sachs Group  vs.  Riot Blockchain

Goldman Sachs Group

Risk-Adjusted Performance

10 of 100

OK

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. 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.

Riot Blockchain

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Riot Blockchain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Riot Blockchain unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Riot Blockchain

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

The idea behind Goldman Sachs Group and Riot Blockchain 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.