Correlation Between Nomad Foods and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and Goosehead Insurance 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 Nomad Foods and Goosehead Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and Goosehead Insurance, you can compare the effects of market volatilities on Nomad Foods and Goosehead Insurance 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 Nomad Foods with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and Goosehead Insurance.
Diversification Opportunities for Nomad Foods and Goosehead Insurance
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nomad and Goosehead is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and Nomad Foods 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 Nomad Foods are associated (or correlated) with Goosehead Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goosehead Insurance has no effect on the direction of Nomad Foods i.e., Nomad Foods and Goosehead Insurance go up and down completely randomly.
Pair Corralation between Nomad Foods and Goosehead Insurance
Assuming the 90 days trading horizon Nomad Foods is expected to generate 2.42 times less return on investment than Goosehead Insurance. But when comparing it to its historical volatility, Nomad Foods is 1.46 times less risky than Goosehead Insurance. It trades about 0.04 of its potential returns per unit of risk. Goosehead Insurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,384 in Goosehead Insurance on October 30, 2024 and sell it today you would earn a total of 310.00 from holding Goosehead Insurance or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. Goosehead Insurance
Performance |
| Timeline |
| Nomad Foods |
| Goosehead Insurance |
Nomad Foods and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and Goosehead Insurance
The main advantage of trading using opposite Nomad Foods and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, Goosehead Insurance 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 Goosehead Insurance will offset losses from the drop in Goosehead Insurance's long position.| Nomad Foods vs. Altair Engineering | Nomad Foods vs. SALESFORCE INC CDR | Nomad Foods vs. ALTAIR RES INC | Nomad Foods vs. Norwegian Air Shuttle |
| Goosehead Insurance vs. TITANIUM TRANSPORTGROUP | Goosehead Insurance vs. SCIENCE IN SPORT | Goosehead Insurance vs. DICKS Sporting Goods | Goosehead Insurance vs. BII Railway Transportation |
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 the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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