Correlation Between Goosehead Insurance and Hyatt Hotels

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

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

Diversification Opportunities for Goosehead Insurance and Hyatt Hotels

-0.44

Correlation Coefficient

Goosehead Insurance  Hyatt Hotels

Very good diversification

The 3 months correlation between Goosehead and Hyatt is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Goosehead Insurance 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 Goosehead Insurance are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Hyatt Hotels go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Hyatt Hotels

Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 1.49 times more return on investment than Hyatt Hotels. However, Goosehead Insurance is 1.49 times more volatile than Hyatt Hotels. It trades about 0.06 of its potential returns per unit of risk. Hyatt Hotels is currently generating about -0.23 per unit of risk. If you would invest  9,595  in Goosehead Insurance on December 24, 2024 and sell it today you would earn a total of  840.00  from holding Goosehead Insurance or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Goosehead Insurance  vs.  Hyatt Hotels

Goosehead Insurance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Goosehead Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hyatt Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyatt Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Goosehead Insurance and Hyatt Hotels

The main advantage of trading using opposite Goosehead Insurance and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goosehead Insurance position performs unexpectedly, Hyatt Hotels 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.

The idea behind Goosehead Insurance and Hyatt Hotels 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.