Correlation Between Maiden Holdings and GoHealth

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

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

Diversification Opportunities for Maiden Holdings and GoHealth

0.64

Correlation Coefficient

Maiden Holdings  GoHealth

Poor diversification

The 3 months correlation between Maiden and GoHealth is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and GoHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoHealth and Maiden Holdings 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 Maiden Holdings are associated (or correlated) with GoHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoHealth has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and GoHealth go up and down completely randomly.

Pair Corralation between Maiden Holdings and GoHealth

Given the investment horizon of 90 days Maiden Holdings is expected to under-perform the GoHealth. But the stock apears to be less risky and, when comparing its historical volatility, Maiden Holdings is 2.56 times less risky than GoHealth. The stock trades about -0.05 of its potential returns per unit of risk. The GoHealth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  883.00  in GoHealth on September 13, 2024 and sell it today you would earn a total of  239.00  from holding GoHealth or generate 27.07% return on investment over 90 days.

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

Maiden Holdings  vs.  GoHealth

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Maiden Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

GoHealth

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GoHealth are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, GoHealth displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maiden Holdings and GoHealth

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

The idea behind Maiden Holdings and GoHealth 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.