Correlation Between Goosehead Insurance and American Eagle
Can any of the company-specific risk be diversified away by investing in both Goosehead Insurance and American Eagle 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 American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goosehead Insurance and American Eagle Outfitters, you can compare the effects of market volatilities on Goosehead Insurance and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goosehead Insurance and American Eagle.
Diversification Opportunities for Goosehead Insurance and American Eagle
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Goosehead and American is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and American Eagle go up and down completely randomly.
Pair Corralation between Goosehead Insurance and American Eagle
Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 1.33 times more return on investment than American Eagle. However, Goosehead Insurance is 1.33 times more volatile than American Eagle Outfitters. It trades about 0.07 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.09 per unit of risk. If you would invest 9,756 in Goosehead Insurance on November 7, 2024 and sell it today you would earn a total of 379.00 from holding Goosehead Insurance or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Goosehead Insurance vs. American Eagle Outfitters
Performance |
| Timeline |
| Goosehead Insurance |
| American Eagle Outfitters |
Goosehead Insurance and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goosehead Insurance and American Eagle
The main advantage of trading using opposite Goosehead Insurance and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goosehead Insurance position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Goosehead Insurance vs. Lendlease Group | Goosehead Insurance vs. TELECOM ITALRISP ADR10 | Goosehead Insurance vs. Cogent Communications Holdings | Goosehead Insurance vs. GRENKELEASING Dusseldorf |
| American Eagle vs. PNC Financial Services | American Eagle vs. Synovus Financial Corp | American Eagle vs. Renesas Electronics | American Eagle vs. TT Electronics PLC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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