Correlation Between Invesco Solar and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Invesco Solar 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 Invesco Solar and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco Solar ETF and Goldman Sachs Future, you can compare the effects of market volatilities on Invesco Solar 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 Invesco Solar with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Solar and Goldman Sachs.

Diversification Opportunities for Invesco Solar and Goldman Sachs

0.56

Correlation Coefficient

Invesco Solar  Goldman Sachs

Very weak diversification

The 3 months correlation between Invesco and Goldman is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Solar ETF and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and Invesco Solar 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 Invesco Solar ETF 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 Future has no effect on the direction of Invesco Solar i.e., Invesco Solar and Goldman Sachs go up and down completely randomly.

Pair Corralation between Invesco Solar and Goldman Sachs

Considering the 90-day investment horizon Invesco Solar ETF is expected to under-perform the Goldman Sachs. In addition to that, Invesco Solar is 3.71 times more volatile than Goldman Sachs Future. It trades about -0.11 of its total potential returns per unit of risk. Goldman Sachs Future is currently generating about -0.04 per unit of volatility. If you would invest  3,650  in Goldman Sachs Future on August 23, 2024 and sell it today you would lose (72.00) from holding Goldman Sachs Future or give up 1.97% of portfolio value over 90 days.

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

Invesco Solar ETF  vs.  Goldman Sachs Future

Invesco Solar ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Solar ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Invesco Solar and Goldman Sachs

The main advantage of trading using opposite Invesco Solar and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Solar 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.

The idea behind Invesco Solar ETF and Goldman Sachs Future 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.