Correlation Between Goosehead Insurance and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Goosehead Insurance and Costco Wholesale 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 Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goosehead Insurance and Costco Wholesale, you can compare the effects of market volatilities on Goosehead Insurance and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goosehead Insurance and Costco Wholesale.
Diversification Opportunities for Goosehead Insurance and Costco Wholesale
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goosehead and Costco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Costco Wholesale go up and down completely randomly.
Pair Corralation between Goosehead Insurance and Costco Wholesale
Assuming the 90 days trading horizon Goosehead Insurance is expected to under-perform the Costco Wholesale. In addition to that, Goosehead Insurance is 1.48 times more volatile than Costco Wholesale. It trades about -0.45 of its total potential returns per unit of risk. Costco Wholesale is currently generating about -0.2 per unit of volatility. If you would invest 93,020 in Costco Wholesale on October 9, 2024 and sell it today you would lose (3,940) from holding Costco Wholesale or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 93.75% |
| Values | Daily Returns |
Goosehead Insurance vs. Costco Wholesale
Performance |
| Timeline |
| Goosehead Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Costco Wholesale |
Goosehead Insurance and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goosehead Insurance and Costco Wholesale
The main advantage of trading using opposite Goosehead Insurance and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goosehead Insurance position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc | Goosehead Insurance vs. Apple Inc |
| Costco Wholesale vs. Electronic Arts | Costco Wholesale vs. Benchmark Electronics | Costco Wholesale vs. Methode Electronics | Costco Wholesale vs. KIMBALL ELECTRONICS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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