Correlation Between Goosehead Insurance and NISOURCE

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

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

Diversification Opportunities for Goosehead Insurance and NISOURCE

0.18

Correlation Coefficient

Goosehead Insurance  NISOURCE

Average diversification

The 3 months correlation between Goosehead and NISOURCE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE 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 NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE INC has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and NISOURCE go up and down completely randomly.

Pair Corralation between Goosehead Insurance and NISOURCE

Given the investment horizon of 90 days Goosehead Insurance is expected to generate 5.61 times more return on investment than NISOURCE. However, Goosehead Insurance is 5.61 times more volatile than NISOURCE INC. It trades about 0.0 of its potential returns per unit of risk. NISOURCE INC is currently generating about -0.02 per unit of risk. If you would invest  10,363  in Goosehead Insurance on October 26, 2024 and sell it today you would lose (178.00) from holding Goosehead Insurance or give up 1.72% of portfolio value over 90 days.

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

Goosehead Insurance  vs.  NISOURCE 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.

NISOURCE INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goosehead Insurance and NISOURCE

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

The idea behind Goosehead Insurance and NISOURCE 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.