Correlation Between Goosehead Insurance and ORMAT TECHNOLOGIES

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

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

Diversification Opportunities for Goosehead Insurance and ORMAT TECHNOLOGIES

-0.6

Correlation Coefficient

Goosehead Insurance  ORMAT TECHNOLOGIES

Excellent diversification

The 3 months correlation between Goosehead and ORMAT is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Goosehead Insurance and ORMAT TECHNOLOGIES

Assuming the 90 days trading horizon Goosehead Insurance is expected to generate 5.48 times less return on investment than ORMAT TECHNOLOGIES. In addition to that, Goosehead Insurance is 1.48 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.02 of its total potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.19 per unit of volatility. If you would invest  6,254  in ORMAT TECHNOLOGIES on April 21, 2025 and sell it today you would earn a total of  1,342  from holding ORMAT TECHNOLOGIES or generate 21.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Goosehead Insurance  vs.  ORMAT TECHNOLOGIES

Goosehead Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Goosehead Insurance is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ORMAT TECHNOLOGIES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goosehead Insurance and ORMAT TECHNOLOGIES

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

The idea behind Goosehead Insurance and ORMAT TECHNOLOGIES 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.