Correlation Between KB Financial and Goosehead Insurance

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

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

Diversification Opportunities for KB Financial and Goosehead Insurance

-0.26

Correlation Coefficient

KB Financial  Goosehead Insurance

Very good diversification

The 3 months correlation between KBIA and Goosehead is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and KB Financial 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 KB Financial Group 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 KB Financial i.e., KB Financial and Goosehead Insurance go up and down completely randomly.

Pair Corralation between KB Financial and Goosehead Insurance

Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.09 times more return on investment than Goosehead Insurance. However, KB Financial is 1.09 times more volatile than Goosehead Insurance. It trades about 0.23 of its potential returns per unit of risk. Goosehead Insurance is currently generating about -0.02 per unit of risk. If you would invest  5,100  in KB Financial Group on April 24, 2025 and sell it today you would earn a total of  1,900  from holding KB Financial Group or generate 37.25% return on investment over 90 days.

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

KB Financial Group  vs.  Goosehead Insurance

KB Financial Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, KB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

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 KB Financial and Goosehead Insurance

The main advantage of trading using opposite KB Financial and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial 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 KB Financial Group 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.