Correlation Between Arch Capital and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both Arch Capital and Goosehead 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 Arch Capital and Goosehead Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arch Capital Group and Goosehead Insurance, you can compare the effects of market volatilities on Arch Capital and Goosehead 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 Arch Capital with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Goosehead Insurance.
Diversification Opportunities for Arch Capital and Goosehead Insurance
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arch and Goosehead is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and Arch Capital 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 Arch Capital Group are associated (or correlated) with Goosehead Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goosehead Insurance has no effect on the direction of Arch Capital i.e., Arch Capital and Goosehead Insurance go up and down completely randomly.
Pair Corralation between Arch Capital and Goosehead Insurance
Assuming the 90 days horizon Arch Capital is expected to generate 11.01 times less return on investment than Goosehead Insurance. But when comparing it to its historical volatility, Arch Capital Group is 3.45 times less risky than Goosehead Insurance. It trades about 0.03 of its potential returns per unit of risk. Goosehead Insurance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,241 in Goosehead Insurance on August 28, 2024 and sell it today you would earn a total of 9,342 from holding Goosehead Insurance or generate 288.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. Goosehead Insurance
Performance |
| Timeline |
| Arch Capital Group |
| Goosehead Insurance |
Arch Capital and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Goosehead Insurance
The main advantage of trading using opposite Arch Capital and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Goosehead 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 Goosehead Insurance will offset losses from the drop in Goosehead Insurance's long position.| Arch Capital vs. Athene Holding | Arch Capital vs. The Hartford Financial | Arch Capital vs. Arch Capital Group | Arch Capital vs. Athene Holding |
| Goosehead Insurance vs. Enstar Group Limited | Goosehead Insurance vs. Waterdrop ADR | Goosehead Insurance vs. Axa Equitable Holdings | Goosehead Insurance vs. Hartford Financial Services |
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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