Correlation Between Goosehead Insurance and MOGU

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

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

Diversification Opportunities for Goosehead Insurance and MOGU

-0.17

Correlation Coefficient

Goosehead Insurance  MOGU

Good diversification

The 3 months correlation between Goosehead and MOGU is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and MOGU Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOGU Inc 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 MOGU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOGU Inc has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and MOGU go up and down completely randomly.

Pair Corralation between Goosehead Insurance and MOGU

Given the investment horizon of 90 days Goosehead Insurance is expected to generate 20.93 times less return on investment than MOGU. But when comparing it to its historical volatility, Goosehead Insurance is 1.05 times less risky than MOGU. It trades about 0.02 of its potential returns per unit of risk. MOGU Inc is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  210.00  in MOGU Inc on October 26, 2024 and sell it today you would earn a total of  49.00  from holding MOGU Inc or generate 23.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Goosehead Insurance  vs.  MOGU Inc

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.

MOGU Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOGU Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, MOGU unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goosehead Insurance and MOGU

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

The idea behind Goosehead Insurance and MOGU Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.