Correlation Between Goosehead Insurance and CSL

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

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

Diversification Opportunities for Goosehead Insurance and CSL

-0.12

Correlation Coefficient

Goosehead Insurance  CSL

Good diversification

The 3 months correlation between Goosehead and CSL is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of Goosehead Insurance i.e., Goosehead Insurance and CSL go up and down completely randomly.

Pair Corralation between Goosehead Insurance and CSL

Assuming the 90 days trading horizon Goosehead Insurance is expected to under-perform the CSL. In addition to that, Goosehead Insurance is 1.78 times more volatile than CSL LTD SPONADR. It trades about -0.07 of its total potential returns per unit of risk. CSL LTD SPONADR is currently generating about 0.09 per unit of volatility. If you would invest  6,900  in CSL LTD SPONADR on April 30, 2025 and sell it today you would earn a total of  600.00  from holding CSL LTD SPONADR or generate 8.7% return on investment over 90 days.

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

Goosehead Insurance  vs.  CSL LTD SPONADR

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CSL LTD SPONADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSL LTD SPONADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Goosehead Insurance and CSL

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

The idea behind Goosehead Insurance and CSL LTD SPONADR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.