Correlation Between Aquagold International and Goosehead Insurance

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

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

Diversification Opportunities for Aquagold International and Goosehead Insurance

0.12

Correlation Coefficient

Aquagold International  Goosehead Insurance

Average diversification

The 3 months correlation between Aquagold and Goosehead is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and Aquagold International 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 Aquagold International are associated (or correlated) with Goosehead Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goosehead Insurance has no effect on the direction of Aquagold International i.e., Aquagold International and Goosehead Insurance go up and down completely randomly.

Pair Corralation between Aquagold International and Goosehead Insurance

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Goosehead Insurance. In addition to that, Aquagold International is 7.22 times more volatile than Goosehead Insurance. It trades about -0.16 of its total potential returns per unit of risk. Goosehead Insurance is currently generating about -0.1 per unit of volatility. If you would invest  11,300  in Goosehead Insurance on October 9, 2024 and sell it today you would lose (956.00) from holding Goosehead Insurance or give up 8.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Goosehead Insurance

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Goosehead Insurance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical indicators, Goosehead Insurance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquagold International and Goosehead Insurance

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

The idea behind Aquagold International and Goosehead 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.