Correlation Between AMADEUS IT and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both AMADEUS IT 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 AMADEUS IT and Goosehead Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMADEUS IT GRP and Goosehead Insurance, you can compare the effects of market volatilities on AMADEUS IT 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 AMADEUS IT with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMADEUS IT and Goosehead Insurance.
Diversification Opportunities for AMADEUS IT and Goosehead Insurance
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMADEUS and Goosehead is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding AMADEUS IT GRP and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and AMADEUS IT 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 AMADEUS IT GRP 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 AMADEUS IT i.e., AMADEUS IT and Goosehead Insurance go up and down completely randomly.
Pair Corralation between AMADEUS IT and Goosehead Insurance
Assuming the 90 days trading horizon AMADEUS IT is expected to generate 4.66 times less return on investment than Goosehead Insurance. But when comparing it to its historical volatility, AMADEUS IT GRP is 2.23 times less risky than Goosehead Insurance. It trades about 0.04 of its potential returns per unit of risk. Goosehead Insurance is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,807 in Goosehead Insurance on September 4, 2024 and sell it today you would earn a total of 8,128 from holding Goosehead Insurance or generate 213.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
AMADEUS IT GRP vs. Goosehead Insurance
Performance |
| Timeline |
| AMADEUS IT GRP |
| Goosehead Insurance |
AMADEUS IT and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMADEUS IT and Goosehead Insurance
The main advantage of trading using opposite AMADEUS IT and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMADEUS IT 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.| AMADEUS IT vs. FUJITSU LTD ADR | AMADEUS IT vs. Superior Plus Corp | AMADEUS IT vs. NMI Holdings | AMADEUS IT vs. Origin Agritech |
| Goosehead Insurance vs. Autohome ADR | Goosehead Insurance vs. GREENX METALS LTD | Goosehead Insurance vs. LGI Homes | Goosehead Insurance vs. Evolution Mining Limited |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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