Correlation Between First Trust and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Goosehead Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dorsey and Goosehead Insurance, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Goosehead Insurance.
Diversification Opportunities for First Trust and Goosehead Insurance
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Goosehead is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and First Trust 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 First Trust Dorsey 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 First Trust i.e., First Trust and Goosehead Insurance go up and down completely randomly.
Pair Corralation between First Trust and Goosehead Insurance
Given the investment horizon of 90 days First Trust is expected to generate 2.55 times less return on investment than Goosehead Insurance. But when comparing it to its historical volatility, First Trust Dorsey is 1.86 times less risky than Goosehead Insurance. It trades about 0.32 of its potential returns per unit of risk. Goosehead Insurance is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 10,949 in Goosehead Insurance on August 29, 2024 and sell it today you would earn a total of 2,020 from holding Goosehead Insurance or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dorsey vs. Goosehead Insurance
Performance |
| Timeline |
| First Trust Dorsey |
| Goosehead Insurance |
First Trust and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Goosehead Insurance
The main advantage of trading using opposite First Trust and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. JPMorgan BetaBuilders International | First Trust vs. JPMorgan Core Plus | First Trust vs. JPMorgan BetaBuilders Canada | First Trust vs. JPMorgan Emerging Markets |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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