Correlation Between PennantPark Investment and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment 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 PennantPark Investment and Goosehead Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Goosehead Insurance, you can compare the effects of market volatilities on PennantPark Investment 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 PennantPark Investment with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Goosehead Insurance.
Diversification Opportunities for PennantPark Investment and Goosehead Insurance
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PennantPark and Goosehead is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and PennantPark Investment 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 PennantPark Investment 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 PennantPark Investment i.e., PennantPark Investment and Goosehead Insurance go up and down completely randomly.
Pair Corralation between PennantPark Investment and Goosehead Insurance
Assuming the 90 days horizon PennantPark Investment is expected to generate 2.73 times less return on investment than Goosehead Insurance. But when comparing it to its historical volatility, PennantPark Investment is 1.67 times less risky than Goosehead Insurance. It trades about 0.05 of its potential returns per unit of risk. Goosehead Insurance is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,741 in Goosehead Insurance on September 2, 2024 and sell it today you would earn a total of 8,219 from holding Goosehead Insurance or generate 219.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
PennantPark Investment vs. Goosehead Insurance
Performance |
| Timeline |
| PennantPark Investment |
| Goosehead Insurance |
PennantPark Investment and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Goosehead Insurance
The main advantage of trading using opposite PennantPark Investment and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment 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.| PennantPark Investment vs. Ameriprise Financial | PennantPark Investment vs. Ares Management Corp | PennantPark Investment vs. Superior Plus Corp | PennantPark Investment vs. NMI Holdings |
| Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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