Correlation Between Goosehead Insurance and Sun Life

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

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

Diversification Opportunities for Goosehead Insurance and Sun Life

-0.46

Correlation Coefficient

Goosehead Insurance  Sun Life

Very good diversification

The 3 months correlation between Goosehead and Sun is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and Sun Life go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Sun Life

Given the investment horizon of 90 days Goosehead Insurance is expected to under-perform the Sun Life. In addition to that, Goosehead Insurance is 2.62 times more volatile than Sun Life Financial. It trades about -0.01 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.15 per unit of volatility. If you would invest  5,493  in Sun Life Financial on February 15, 2025 and sell it today you would earn a total of  804.00  from holding Sun Life Financial or generate 14.64% return on investment over 90 days.

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

Goosehead Insurance  vs.  Sun Life Financial

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 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.

Sun Life Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Sun Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goosehead Insurance and Sun Life

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

The idea behind Goosehead Insurance and Sun Life Financial 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.