Correlation Between Goosehead Insurance and BORR DRILLING

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

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

Diversification Opportunities for Goosehead Insurance and BORR DRILLING

-0.88

Correlation Coefficient

Goosehead Insurance  BORR DRILLING

Pay attention - limited upside

The 3 months correlation between Goosehead and BORR is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and BORR DRILLING go up and down completely randomly.

Pair Corralation between Goosehead Insurance and BORR DRILLING

Assuming the 90 days trading horizon Goosehead Insurance is expected to under-perform the BORR DRILLING. But the stock apears to be less risky and, when comparing its historical volatility, Goosehead Insurance is 3.09 times less risky than BORR DRILLING. The stock trades about -0.26 of its potential returns per unit of risk. The BORR DRILLING NEW is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  355.00  in BORR DRILLING NEW on October 11, 2024 and sell it today you would lose (13.00) from holding BORR DRILLING NEW or give up 3.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

Goosehead Insurance  vs.  BORR DRILLING NEW

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.

BORR DRILLING NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BORR DRILLING NEW 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Goosehead Insurance and BORR DRILLING

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

The idea behind Goosehead Insurance and BORR DRILLING NEW 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.