Correlation Between Goosehead Insurance and ScanSource
Can any of the company-specific risk be diversified away by investing in both Goosehead Insurance and ScanSource 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 ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goosehead Insurance and ScanSource, you can compare the effects of market volatilities on Goosehead Insurance and ScanSource 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 ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goosehead Insurance and ScanSource.
Diversification Opportunities for Goosehead Insurance and ScanSource
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goosehead and ScanSource is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and ScanSource go up and down completely randomly.
Pair Corralation between Goosehead Insurance and ScanSource
Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 1.63 times more return on investment than ScanSource. However, Goosehead Insurance is 1.63 times more volatile than ScanSource. It trades about 0.09 of its potential returns per unit of risk. ScanSource is currently generating about 0.07 per unit of risk. If you would invest 6,492 in Goosehead Insurance on September 3, 2024 and sell it today you would earn a total of 5,468 from holding Goosehead Insurance or generate 84.23% 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. ScanSource
Performance |
| Timeline |
| Goosehead Insurance |
| ScanSource |
Goosehead Insurance and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goosehead Insurance and ScanSource
The main advantage of trading using opposite Goosehead Insurance and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goosehead Insurance position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource'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 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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