Correlation Between Goosehead Insurance and International Business

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

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

Diversification Opportunities for Goosehead Insurance and International Business

-0.18

Correlation Coefficient

Goosehead Insurance  International Business

Good diversification

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

Pair Corralation between Goosehead Insurance and International Business

Assuming the 90 days trading horizon Goosehead Insurance is expected to under-perform the International Business. In addition to that, Goosehead Insurance is 1.61 times more volatile than International Business Machines. It trades about -0.02 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.24 per unit of volatility. If you would invest  19,983  in International Business Machines on April 24, 2025 and sell it today you would earn a total of  4,342  from holding International Business Machines or generate 21.73% return on investment over 90 days.

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

Goosehead Insurance  vs.  International Business Machine

Goosehead Insurance

Risk-Adjusted Performance

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 comparatively stable basic indicators, Goosehead Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

International Business

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, International Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goosehead Insurance and International Business

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

The idea behind Goosehead Insurance and International Business Machines 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.