Correlation Between Goosehead Insurance and Gap,

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

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

Diversification Opportunities for Goosehead Insurance and Gap,

0.54

Correlation Coefficient

Goosehead Insurance  Gap,

Very weak diversification

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

Pair Corralation between Goosehead Insurance and Gap,

Given the investment horizon of 90 days Goosehead Insurance is expected to under-perform the Gap,. In addition to that, Goosehead Insurance is 1.0 times more volatile than The Gap,. It trades about -0.32 of its total potential returns per unit of risk. The Gap, is currently generating about -0.14 per unit of volatility. If you would invest  2,518  in The Gap, on October 11, 2024 and sell it today you would lose (137.00) from holding The Gap, or give up 5.44% of portfolio value over 90 days.

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

Goosehead Insurance  vs.  The Gap,

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.

Gap,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Gap, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Goosehead Insurance and Gap,

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

The idea behind Goosehead Insurance and The Gap, 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.