Correlation Between Root and American Well
Can any of the company-specific risk be diversified away by investing in both Root and American Well 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 American Well into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Root Inc and American Well Corp, you can compare the effects of market volatilities on Root and American Well 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 American Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Root and American Well.
Diversification Opportunities for Root and American Well
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Root and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Root Inc and American Well Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Well Corp 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 American Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Well Corp has no effect on the direction of Root i.e., Root and American Well go up and down completely randomly.
Pair Corralation between Root and American Well
Given the investment horizon of 90 days Root Inc is expected to generate 1.08 times more return on investment than American Well. However, Root is 1.08 times more volatile than American Well Corp. It trades about 0.1 of its potential returns per unit of risk. American Well Corp is currently generating about 0.06 per unit of risk. If you would invest 4,961 in Root Inc on September 2, 2024 and sell it today you would earn a total of 5,020 from holding Root Inc or generate 101.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Root Inc vs. American Well Corp
Performance |
| Timeline |
| Root Inc |
| American Well Corp |
Root and American Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Root and American Well
The main advantage of trading using opposite Root and American Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Root position performs unexpectedly, American Well 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 American Well will offset losses from the drop in American Well's long position.| Root vs. Selective Insurance Group | Root vs. Donegal Group B | Root vs. Horace Mann Educators | Root vs. Global Indemnity PLC |
| American Well vs. Doximity | American Well vs. Certara | American Well vs. Teladoc | American Well vs. Definitive Healthcare Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |