Correlation Between Goosehead Insurance and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both Goosehead Insurance and HANOVER 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 HANOVER 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 HANOVER INSURANCE, you can compare the effects of market volatilities on Goosehead Insurance and HANOVER 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 HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goosehead Insurance and HANOVER INSURANCE.
Diversification Opportunities for Goosehead Insurance and HANOVER INSURANCE
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goosehead and HANOVER is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE 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 HANOVER INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANOVER INSURANCE has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between Goosehead Insurance and HANOVER INSURANCE
Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 1.84 times more return on investment than HANOVER INSURANCE. However, Goosehead Insurance is 1.84 times more volatile than HANOVER INSURANCE. It trades about 0.15 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.1 per unit of risk. If you would invest 7,121 in Goosehead Insurance on November 2, 2024 and sell it today you would earn a total of 3,079 from holding Goosehead Insurance or generate 43.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goosehead Insurance vs. HANOVER INSURANCE
Performance |
| Timeline |
| Goosehead Insurance |
| HANOVER INSURANCE |
Goosehead Insurance and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goosehead Insurance and HANOVER INSURANCE
The main advantage of trading using opposite Goosehead Insurance and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goosehead Insurance position performs unexpectedly, HANOVER 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 HANOVER INSURANCE will offset losses from the drop in HANOVER INSURANCE's long position.| Goosehead Insurance vs. BOSTON BEER A | Goosehead Insurance vs. Tsingtao Brewery | Goosehead Insurance vs. CONTAGIOUS GAMING INC | Goosehead Insurance vs. MOLSON RS BEVERAGE |
| HANOVER INSURANCE vs. Cars Inc | HANOVER INSURANCE vs. Carsales | HANOVER INSURANCE vs. GEELY AUTOMOBILE | HANOVER INSURANCE vs. Canadian Utilities Limited |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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