Correlation Between Goosehead Insurance and Ping An

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

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

Diversification Opportunities for Goosehead Insurance and Ping An

0.42

Correlation Coefficient

Goosehead Insurance  Ping An

Very weak diversification

The 3 months correlation between Goosehead and Ping is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance 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 Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Ping An go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Ping An

Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 1.56 times more return on investment than Ping An. However, Goosehead Insurance is 1.56 times more volatile than Ping An Insurance. It trades about 0.09 of its potential returns per unit of risk. Ping An Insurance is currently generating about 0.0 per unit of risk. If you would invest  9,384  in Goosehead Insurance on December 30, 2024 and sell it today you would earn a total of  1,541  from holding Goosehead Insurance or generate 16.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Goosehead Insurance  vs.  Ping An Insurance

Goosehead Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 6 (%) 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.

Ping An Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ping An Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ping An is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Goosehead Insurance and Ping An

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

The idea behind Goosehead Insurance and Ping An 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.