Correlation Between Assicurazioni Generali and Goosehead Insurance

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

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

Diversification Opportunities for Assicurazioni Generali and Goosehead Insurance

-0.84

Correlation Coefficient

Assicurazioni Generali  Goosehead Insurance

Pay attention - limited upside

The 3 months correlation between Assicurazioni and Goosehead is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Assicurazioni Generali SpA and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and Assicurazioni Generali 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 Assicurazioni Generali SpA 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 Assicurazioni Generali i.e., Assicurazioni Generali and Goosehead Insurance go up and down completely randomly.

Pair Corralation between Assicurazioni Generali and Goosehead Insurance

Assuming the 90 days horizon Assicurazioni Generali SpA is expected to generate 0.14 times more return on investment than Goosehead Insurance. However, Assicurazioni Generali SpA is 6.96 times less risky than Goosehead Insurance. It trades about -0.09 of its potential returns per unit of risk. Goosehead Insurance is currently generating about -0.12 per unit of risk. If you would invest  2,500  in Assicurazioni Generali SpA on February 2, 2024 and sell it today you would lose (25.00) from holding Assicurazioni Generali SpA or give up 1.0% of portfolio value over 90 days.

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

Assicurazioni Generali SpA  vs.  Goosehead Insurance

Assicurazioni Generali

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Assicurazioni Generali reported solid returns over the last few months and may actually be approaching a breakup point.

Goosehead Insurance

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Assicurazioni Generali and Goosehead Insurance

The main advantage of trading using opposite Assicurazioni Generali and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assicurazioni Generali 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 Assicurazioni Generali SpA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.