Correlation Between Goosehead Insurance and United Insurance
Can any of the company-specific risk be diversified away by investing in both Goosehead Insurance and United 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 Goosehead Insurance and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goosehead Insurance and United Insurance Holdings, you can compare the effects of market volatilities on Goosehead Insurance and United 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 Goosehead Insurance with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goosehead Insurance and United Insurance.
Diversification Opportunities for Goosehead Insurance and United Insurance
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goosehead and United is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings and Goosehead Insurance 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 Goosehead Insurance are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and United Insurance go up and down completely randomly.
Pair Corralation between Goosehead Insurance and United Insurance
Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 0.52 times more return on investment than United Insurance. However, Goosehead Insurance is 1.92 times less risky than United Insurance. It trades about 0.48 of its potential returns per unit of risk. United Insurance Holdings is currently generating about 0.2 per unit of risk. If you would invest 9,904 in Goosehead Insurance on August 30, 2024 and sell it today you would earn a total of 2,276 from holding Goosehead Insurance or generate 22.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goosehead Insurance vs. United Insurance Holdings
Performance |
| Timeline |
| Goosehead Insurance |
| United Insurance Holdings |
Goosehead Insurance and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goosehead Insurance and United Insurance
The main advantage of trading using opposite Goosehead Insurance and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goosehead Insurance position performs unexpectedly, United 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 United Insurance will offset losses from the drop in United Insurance's long position.| Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc |
| United Insurance vs. NH HOTEL GROUP | United Insurance vs. Gaztransport Technigaz SA | United Insurance vs. Texas Roadhouse | United Insurance vs. Warner Music Group |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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