Correlation Between Goosehead Insurance and MULTI CHEM
Can any of the company-specific risk be diversified away by investing in both Goosehead Insurance and MULTI CHEM 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 MULTI CHEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goosehead Insurance and MULTI CHEM LTD, you can compare the effects of market volatilities on Goosehead Insurance and MULTI CHEM 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 MULTI CHEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goosehead Insurance and MULTI CHEM.
Diversification Opportunities for Goosehead Insurance and MULTI CHEM
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goosehead and MULTI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and MULTI CHEM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI CHEM LTD 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 MULTI CHEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI CHEM LTD has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and MULTI CHEM go up and down completely randomly.
Pair Corralation between Goosehead Insurance and MULTI CHEM
Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 1.14 times more return on investment than MULTI CHEM. However, Goosehead Insurance is 1.14 times more volatile than MULTI CHEM LTD. It trades about 0.19 of its potential returns per unit of risk. MULTI CHEM LTD is currently generating about 0.07 per unit of risk. If you would invest 5,670 in Goosehead Insurance on September 3, 2024 and sell it today you would earn a total of 6,290 from holding Goosehead Insurance or generate 110.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Goosehead Insurance vs. MULTI CHEM LTD
Performance |
| Timeline |
| Goosehead Insurance |
| MULTI CHEM LTD |
Goosehead Insurance and MULTI CHEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goosehead Insurance and MULTI CHEM
The main advantage of trading using opposite Goosehead Insurance and MULTI CHEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goosehead Insurance position performs unexpectedly, MULTI CHEM 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 MULTI CHEM will offset losses from the drop in MULTI CHEM's long position.| Goosehead Insurance vs. Regions Financial | Goosehead Insurance vs. The Hanover Insurance | Goosehead Insurance vs. Aozora Bank | Goosehead Insurance vs. Jacquet Metal Service |
| MULTI CHEM vs. Goosehead Insurance | MULTI CHEM vs. Lion One Metals | MULTI CHEM vs. LIFENET INSURANCE CO | MULTI CHEM vs. GALENA MINING LTD |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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