Correlation Between Aegon NV and Goosehead Insurance

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

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

Diversification Opportunities for Aegon NV and Goosehead Insurance

-0.54

Correlation Coefficient

Aegon NV  Goosehead Insurance

Excellent diversification

The 3 months correlation between Aegon and Goosehead is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and Aegon NV 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 Aegon NV ADR 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 Aegon NV i.e., Aegon NV and Goosehead Insurance go up and down completely randomly.

Pair Corralation between Aegon NV and Goosehead Insurance

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.27 times more return on investment than Goosehead Insurance. However, Aegon NV ADR is 3.66 times less risky than Goosehead Insurance. It trades about 0.42 of its potential returns per unit of risk. Goosehead Insurance is currently generating about 0.09 per unit of risk. If you would invest  619.00  in Aegon NV ADR on February 23, 2024 and sell it today you would earn a total of  57.00  from holding Aegon NV ADR or generate 9.21% return on investment over 90 days.

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

Aegon NV ADR  vs.  Goosehead Insurance

Aegon NV ADR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Aegon NV 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 unsteady 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 Aegon NV and Goosehead Insurance

The main advantage of trading using opposite Aegon NV and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV 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 Aegon NV ADR 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.