Correlation Between BAKED GAMES and Goosehead Insurance

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

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

Diversification Opportunities for BAKED GAMES and Goosehead Insurance

0.56

Correlation Coefficient

BAKED GAMES  Goosehead Insurance

Very weak diversification

The 3 months correlation between BAKED and Goosehead is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BAKED GAMES SA and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and BAKED GAMES 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 BAKED GAMES SA 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 BAKED GAMES i.e., BAKED GAMES and Goosehead Insurance go up and down completely randomly.

Pair Corralation between BAKED GAMES and Goosehead Insurance

Assuming the 90 days horizon BAKED GAMES SA is expected to under-perform the Goosehead Insurance. In addition to that, BAKED GAMES is 1.25 times more volatile than Goosehead Insurance. It trades about -0.05 of its total potential returns per unit of risk. Goosehead Insurance is currently generating about -0.02 per unit of volatility. If you would invest  8,950  in Goosehead Insurance on April 24, 2025 and sell it today you would lose (298.00) from holding Goosehead Insurance or give up 3.33% of portfolio value over 90 days.

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

BAKED GAMES SA  vs.  Goosehead Insurance

BAKED GAMES SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAKED GAMES SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with BAKED GAMES and Goosehead Insurance

The main advantage of trading using opposite BAKED GAMES and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAKED GAMES 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 BAKED GAMES SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.