Correlation Between Goosehead Insurance and Yellow Pages

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

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

Diversification Opportunities for Goosehead Insurance and Yellow Pages

-0.26

Correlation Coefficient

Goosehead Insurance  Yellow Pages

Very good diversification

The 3 months correlation between Goosehead and Yellow is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Yellow Pages Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yellow Pages Limited 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 Yellow Pages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yellow Pages Limited has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Yellow Pages go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Yellow Pages

Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 1.67 times more return on investment than Yellow Pages. However, Goosehead Insurance is 1.67 times more volatile than Yellow Pages Limited. It trades about 0.06 of its potential returns per unit of risk. Yellow Pages Limited is currently generating about -0.08 per unit of risk. If you would invest  9,632  in Goosehead Insurance on December 22, 2024 and sell it today you would earn a total of  868.00  from holding Goosehead Insurance or generate 9.01% return on investment over 90 days.

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

Goosehead Insurance  vs.  Yellow Pages Limited

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 unsteady basic indicators, Goosehead Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Yellow Pages Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yellow Pages Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 Yellow Pages

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

The idea behind Goosehead Insurance and Yellow Pages Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..