Correlation Between MSCI ACWI and Goosehead Insurance

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

By analyzing existing cross correlation between MSCI ACWI exAUCONSUMER and Goosehead Insurance, you can compare the effects of market volatilities on MSCI ACWI and Goosehead Insurance 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 MSCI ACWI with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI ACWI and Goosehead Insurance.

Diversification Opportunities for MSCI ACWI and Goosehead Insurance

0.63

Correlation Coefficient

MSCI ACWI  Goosehead Insurance

Poor diversification

The 3 months correlation between MSCI and Goosehead is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MSCI ACWI exAUCONSUMER and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and MSCI ACWI 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 MSCI ACWI exAUCONSUMER are associated (or correlated) with Goosehead Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goosehead Insurance has no effect on the direction of MSCI ACWI i.e., MSCI ACWI and Goosehead Insurance go up and down completely randomly.

Pair Corralation between MSCI ACWI and Goosehead Insurance

Assuming the 90 days horizon MSCI ACWI is expected to generate 2.63 times less return on investment than Goosehead Insurance. But when comparing it to its historical volatility, MSCI ACWI exAUCONSUMER is 18.62 times less risky than Goosehead Insurance. It trades about 0.33 of its potential returns per unit of risk. Goosehead Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  10,443  in Goosehead Insurance on October 23, 2024 and sell it today you would earn a total of  189.00  from holding Goosehead Insurance or generate 1.81% return on investment over 90 days.

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

MSCI ACWI exAUCONSUMER  vs.  Goosehead Insurance

MSCI ACWI exAUCONSUMER

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI ACWI exAUCONSUMER are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, MSCI ACWI is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Goosehead Insurance

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical indicators, Goosehead Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MSCI ACWI and Goosehead Insurance

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

The idea behind MSCI ACWI exAUCONSUMER and Goosehead Insurance 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.