Correlation Between Denison Mines and Goosehead Insurance

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

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

Diversification Opportunities for Denison Mines and Goosehead Insurance

0.62

Correlation Coefficient

Denison Mines  Goosehead Insurance

Poor diversification

The 3 months correlation between Denison and Goosehead is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Denison Mines Corp and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and Denison Mines 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 Denison Mines Corp 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 Denison Mines i.e., Denison Mines and Goosehead Insurance go up and down completely randomly.

Pair Corralation between Denison Mines and Goosehead Insurance

Considering the 90-day investment horizon Denison Mines Corp is expected to generate 2.51 times more return on investment than Goosehead Insurance. However, Denison Mines is 2.51 times more volatile than Goosehead Insurance. It trades about -0.03 of its potential returns per unit of risk. Goosehead Insurance is currently generating about -0.33 per unit of risk. If you would invest  219.00  in Denison Mines Corp on October 8, 2024 and sell it today you would lose (9.00) from holding Denison Mines Corp or give up 4.11% of portfolio value over 90 days.

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

Denison Mines Corp  vs.  Goosehead Insurance

Denison Mines Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Denison Mines displayed solid returns over the last few months and may actually be approaching a breakup point.

Goosehead Insurance

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 10 (%) 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 Denison Mines and Goosehead Insurance

The main advantage of trading using opposite Denison Mines and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Denison Mines 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 Denison Mines Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.