Correlation Between Enstar Group and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both Enstar Group 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 Enstar Group and Goosehead Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enstar Group Limited and Goosehead Insurance, you can compare the effects of market volatilities on Enstar Group 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 Enstar Group with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enstar Group and Goosehead Insurance.
Diversification Opportunities for Enstar Group and Goosehead Insurance
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enstar and Goosehead is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Enstar Group Limited and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and Enstar Group 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 Enstar Group Limited 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 Enstar Group i.e., Enstar Group and Goosehead Insurance go up and down completely randomly.
Pair Corralation between Enstar Group and Goosehead Insurance
Given the investment horizon of 90 days Enstar Group Limited is expected to under-perform the Goosehead Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Enstar Group Limited is 10.44 times less risky than Goosehead Insurance. The stock trades about -0.04 of its potential returns per unit of risk. The Goosehead Insurance is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 9,603 in Goosehead Insurance on August 24, 2024 and sell it today you would earn a total of 2,615 from holding Goosehead Insurance or generate 27.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enstar Group Limited vs. Goosehead Insurance
Performance |
| Timeline |
| Enstar Group Limited |
| Goosehead Insurance |
Enstar Group and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enstar Group and Goosehead Insurance
The main advantage of trading using opposite Enstar Group and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enstar Group 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.| Enstar Group vs. Global Indemnity PLC | Enstar Group vs. Erie Indemnity | Enstar Group vs. AMERISAFE | Enstar Group vs. Diamond Hill Investment |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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