Correlation Between PEPTONIC MEDICAL and Goosehead Insurance

Can any of the company-specific risk be diversified away by investing in both PEPTONIC MEDICAL 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 PEPTONIC MEDICAL and Goosehead Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PEPTONIC MEDICAL and Goosehead Insurance, you can compare the effects of market volatilities on PEPTONIC MEDICAL 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 PEPTONIC MEDICAL with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPTONIC MEDICAL and Goosehead Insurance.

Diversification Opportunities for PEPTONIC MEDICAL and Goosehead Insurance

0.0

Correlation Coefficient

PEPTONIC MEDICAL  Goosehead Insurance

Pay attention - limited upside

The 3 months correlation between PEPTONIC and Goosehead is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PEPTONIC MEDICAL and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and PEPTONIC MEDICAL 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 PEPTONIC MEDICAL 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 PEPTONIC MEDICAL i.e., PEPTONIC MEDICAL and Goosehead Insurance go up and down completely randomly.

Pair Corralation between PEPTONIC MEDICAL and Goosehead Insurance

Assuming the 90 days horizon PEPTONIC MEDICAL is expected to generate 19.3 times more return on investment than Goosehead Insurance. However, PEPTONIC MEDICAL is 19.3 times more volatile than Goosehead Insurance. It trades about 0.07 of its potential returns per unit of risk. Goosehead Insurance is currently generating about 0.09 per unit of risk. If you would invest  0.24  in PEPTONIC MEDICAL on October 11, 2024 and sell it today you would lose (0.22) from holding PEPTONIC MEDICAL or give up 91.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

PEPTONIC MEDICAL  vs.  Goosehead Insurance

PEPTONIC MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPTONIC MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PEPTONIC MEDICAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Goosehead Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goosehead Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PEPTONIC MEDICAL and Goosehead Insurance

The main advantage of trading using opposite PEPTONIC MEDICAL and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPTONIC MEDICAL 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.

The idea behind PEPTONIC MEDICAL and Goosehead Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.