Correlation Between Goosehead Insurance and SHIP HEALTHCARE

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

By analyzing existing cross correlation between Goosehead Insurance and SHIP HEALTHCARE HLDGINC, you can compare the effects of market volatilities on Goosehead Insurance and SHIP HEALTHCARE 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 SHIP HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goosehead Insurance and SHIP HEALTHCARE.

Diversification Opportunities for Goosehead Insurance and SHIP HEALTHCARE

-0.51

Correlation Coefficient

Goosehead Insurance  SHIP HEALTHCARE

Excellent diversification

The 3 months correlation between Goosehead and SHIP is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and SHIP HEALTHCARE HLDGINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIP HEALTHCARE HLDGINC has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and SHIP HEALTHCARE go up and down completely randomly.

Pair Corralation between Goosehead Insurance and SHIP HEALTHCARE

Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 1.87 times more return on investment than SHIP HEALTHCARE. However, Goosehead Insurance is 1.87 times more volatile than SHIP HEALTHCARE HLDGINC. It trades about 0.15 of its potential returns per unit of risk. SHIP HEALTHCARE HLDGINC is currently generating about -0.08 per unit of risk. If you would invest  8,828  in Goosehead Insurance on October 21, 2024 and sell it today you would earn a total of  2,177  from holding Goosehead Insurance or generate 24.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Goosehead Insurance  vs.  SHIP HEALTHCARE HLDGINC

Goosehead Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Goosehead Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIP HEALTHCARE HLDGINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Goosehead Insurance and SHIP HEALTHCARE

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

The idea behind Goosehead Insurance and SHIP HEALTHCARE HLDGINC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.