Correlation Between Root and Koss

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

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

Diversification Opportunities for Root and Koss

-0.13

Correlation Coefficient

Root  Koss

Good diversification

The 3 months correlation between Root and Koss is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Root Inc and Koss Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koss and Root 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 Root Inc are associated (or correlated) with Koss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koss has no effect on the direction of Root i.e., Root and Koss go up and down completely randomly.

Pair Corralation between Root and Koss

Given the investment horizon of 90 days Root Inc is expected to generate 3.01 times more return on investment than Koss. However, Root is 3.01 times more volatile than Koss Corporation. It trades about 0.17 of its potential returns per unit of risk. Koss Corporation is currently generating about 0.01 per unit of risk. If you would invest  3,717  in Root Inc on September 12, 2024 and sell it today you would earn a total of  4,541  from holding Root Inc or generate 122.17% return on investment over 90 days.

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

Root Inc  vs.  Koss Corp.

Root Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Root Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Root unveiled solid returns over the last few months and may actually be approaching a breakup point.

Koss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koss Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Koss is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Root and Koss

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

The idea behind Root Inc and Koss Corporation 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.