Correlation Between Loews Corp and Root
Can any of the company-specific risk be diversified away by investing in both Loews Corp and Root 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 Loews Corp and Root into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loews Corp and Root Inc, you can compare the effects of market volatilities on Loews Corp and Root 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 Loews Corp with a short position of Root. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Root.
Diversification Opportunities for Loews Corp and Root
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loews and Root is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Root Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Root Inc and Loews Corp 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 Loews Corp are associated (or correlated) with Root. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Root Inc has no effect on the direction of Loews Corp i.e., Loews Corp and Root go up and down completely randomly.
Pair Corralation between Loews Corp and Root
Taking into account the 90-day investment horizon Loews Corp is expected to generate 17.88 times less return on investment than Root. But when comparing it to its historical volatility, Loews Corp is 8.81 times less risky than Root. It trades about 0.18 of its potential returns per unit of risk. Root Inc is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,047 in Root Inc on August 27, 2024 and sell it today you would earn a total of 6,797 from holding Root Inc or generate 167.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loews Corp vs. Root Inc
Performance |
| Timeline |
| Loews Corp |
| Root Inc |
Loews Corp and Root Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loews Corp and Root
The main advantage of trading using opposite Loews Corp and Root positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp position performs unexpectedly, Root 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 Root will offset losses from the drop in Root's long position.| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
| Root vs. Selective Insurance Group | Root vs. Donegal Group B | Root vs. Horace Mann Educators | Root vs. Global Indemnity PLC |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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