Correlation Between Goosehead Insurance and Aston Martin

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

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

Diversification Opportunities for Goosehead Insurance and Aston Martin

-0.36

Correlation Coefficient

Goosehead Insurance  Aston Martin

Very good diversification

The 3 months correlation between Goosehead and Aston is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Aston Martin go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Aston Martin

Given the investment horizon of 90 days Goosehead Insurance is expected to generate 0.86 times more return on investment than Aston Martin. However, Goosehead Insurance is 1.16 times less risky than Aston Martin. It trades about 0.1 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.09 per unit of risk. If you would invest  9,884  in Goosehead Insurance on December 21, 2024 and sell it today you would earn a total of  1,770  from holding Goosehead Insurance or generate 17.91% return on investment over 90 days.

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

Goosehead Insurance  vs.  Aston Martin Lagonda

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.

Aston Martin Lagonda

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Goosehead Insurance and Aston Martin

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

The idea behind Goosehead Insurance and Aston Martin Lagonda 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.