Correlation Between Goosehead Insurance and Alignment Healthcare

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

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

Diversification Opportunities for Goosehead Insurance and Alignment Healthcare

0.58

Correlation Coefficient

Goosehead Insurance  Alignment Healthcare

Very weak diversification

The 3 months correlation between Goosehead and Alignment is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC 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 Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Alignment Healthcare go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Alignment Healthcare

Given the investment horizon of 90 days Goosehead Insurance is expected to generate 2.76 times less return on investment than Alignment Healthcare. But when comparing it to its historical volatility, Goosehead Insurance is 1.11 times less risky than Alignment Healthcare. It trades about 0.1 of its potential returns per unit of risk. Alignment Healthcare LLC is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,071  in Alignment Healthcare LLC on December 22, 2024 and sell it today you would earn a total of  690.00  from holding Alignment Healthcare LLC or generate 64.43% 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.  Alignment Healthcare LLC

Goosehead Insurance

Risk-Adjusted Performance

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.

Alignment Healthcare LLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, Alignment Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goosehead Insurance and Alignment Healthcare

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

The idea behind Goosehead Insurance and Alignment Healthcare LLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.