Correlation Between Goosehead Insurance and Corning Incorporated

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

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

Diversification Opportunities for Goosehead Insurance and Corning Incorporated

0.28

Correlation Coefficient

Goosehead Insurance  Corning Incorporated

Modest diversification

The 3 months correlation between Goosehead and Corning is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated 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 Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Corning Incorporated go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Corning Incorporated

Given the investment horizon of 90 days Goosehead Insurance is expected to generate 11.2 times less return on investment than Corning Incorporated. In addition to that, Goosehead Insurance is 1.64 times more volatile than Corning Incorporated. It trades about 0.02 of its total potential returns per unit of risk. Corning Incorporated is currently generating about 0.37 per unit of volatility. If you would invest  4,799  in Corning Incorporated on October 26, 2024 and sell it today you would earn a total of  613.50  from holding Corning Incorporated or generate 12.78% return on investment over 90 days.

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

Goosehead Insurance  vs.  Corning Incorporated

Goosehead Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goosehead Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Goosehead Insurance is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Corning Incorporated

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goosehead Insurance and Corning Incorporated

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

The idea behind Goosehead Insurance and Corning Incorporated 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.