Correlation Between SM Investments and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both SM Investments 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 SM Investments and Goosehead Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Investments and Goosehead Insurance, you can compare the effects of market volatilities on SM Investments 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 SM Investments with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Goosehead Insurance.
Diversification Opportunities for SM Investments and Goosehead Insurance
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SVTMF and Goosehead is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and SM Investments 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 SM Investments 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 SM Investments i.e., SM Investments and Goosehead Insurance go up and down completely randomly.
Pair Corralation between SM Investments and Goosehead Insurance
Assuming the 90 days horizon SM Investments is expected to under-perform the Goosehead Insurance. But the pink sheet apears to be less risky and, when comparing its historical volatility, SM Investments is 2.11 times less risky than Goosehead Insurance. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Goosehead Insurance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,109 in Goosehead Insurance on November 4, 2024 and sell it today you would earn a total of 608.00 from holding Goosehead Insurance or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
SM Investments vs. Goosehead Insurance
Performance |
| Timeline |
| SM Investments |
| Goosehead Insurance |
SM Investments and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Goosehead Insurance
The main advantage of trading using opposite SM Investments and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments 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.| SM Investments vs. Lianhua Supermarket Holdings | SM Investments vs. AMCON Distributing | SM Investments vs. WK Kellogg Co | SM Investments vs. Healthy Coffee International |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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