Correlation Between Goosehead Insurance and Aegon NV

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

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

Diversification Opportunities for Goosehead Insurance and Aegon NV

0.54

Correlation Coefficient

Goosehead Insurance  Aegon NV

Very weak diversification

The 3 months correlation between Goosehead and Aegon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR 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 Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Aegon NV go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Aegon NV

Given the investment horizon of 90 days Goosehead Insurance is expected to generate 1.59 times more return on investment than Aegon NV. However, Goosehead Insurance is 1.59 times more volatile than Aegon NV ADR. It trades about 0.12 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.12 per unit of risk. If you would invest  9,850  in Goosehead Insurance on December 29, 2024 and sell it today you would earn a total of  2,218  from holding Goosehead Insurance or generate 22.52% return on investment over 90 days.

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

Goosehead Insurance  vs.  Aegon NV ADR

Goosehead Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 9 (%) 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.

Aegon NV ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Aegon NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goosehead Insurance and Aegon NV

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

The idea behind Goosehead Insurance and Aegon NV ADR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.