Correlation Between SPORT LISBOA and Goosehead Insurance

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

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

Diversification Opportunities for SPORT LISBOA and Goosehead Insurance

0.21

Correlation Coefficient

SPORT LISBOA  Goosehead Insurance

Modest diversification

The 3 months correlation between SPORT and Goosehead is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and SPORT LISBOA 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 SPORT LISBOA E 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 SPORT LISBOA i.e., SPORT LISBOA and Goosehead Insurance go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Goosehead Insurance

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 1.86 times more return on investment than Goosehead Insurance. However, SPORT LISBOA is 1.86 times more volatile than Goosehead Insurance. It trades about 0.17 of its potential returns per unit of risk. Goosehead Insurance is currently generating about -0.04 per unit of risk. If you would invest  371.00  in SPORT LISBOA E on April 23, 2025 and sell it today you would earn a total of  173.00  from holding SPORT LISBOA E or generate 46.63% return on investment over 90 days.

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

SPORT LISBOA E  vs.  Goosehead Insurance

SPORT LISBOA E

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SPORT LISBOA reported solid returns over the last few months and may actually be approaching a breakup point.

Goosehead Insurance

Risk-Adjusted Performance

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPORT LISBOA and Goosehead Insurance

The main advantage of trading using opposite SPORT LISBOA and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA 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 SPORT LISBOA E 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.