Correlation Between Koss and IRobot
Can any of the company-specific risk be diversified away by investing in both Koss and IRobot 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 Koss and IRobot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koss Corporation and iRobot, you can compare the effects of market volatilities on Koss and IRobot 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 Koss with a short position of IRobot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koss and IRobot.
Diversification Opportunities for Koss and IRobot
Very poor diversification
The 3 months correlation between Koss and IRobot is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Koss Corp. and iRobot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRobot and Koss 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 Koss Corporation are associated (or correlated) with IRobot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRobot has no effect on the direction of Koss i.e., Koss and IRobot go up and down completely randomly.
Pair Corralation between Koss and IRobot
Given the investment horizon of 90 days Koss Corporation is expected to generate 0.3 times more return on investment than IRobot. However, Koss Corporation is 3.31 times less risky than IRobot. It trades about -0.13 of its potential returns per unit of risk. iRobot is currently generating about -0.1 per unit of risk. If you would invest 248.00 in Koss Corporation on January 20, 2024 and sell it today you would lose (13.00) from holding Koss Corporation or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koss Corp. vs. iRobot
Performance |
| Timeline |
| Koss |
| iRobot |
Koss and IRobot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koss and IRobot
The main advantage of trading using opposite Koss and IRobot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koss position performs unexpectedly, IRobot 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 IRobot will offset losses from the drop in IRobot's long position.| Koss vs. LG Display Co | Koss vs. The Singing Machine | Koss vs. Wearable Devices | Koss vs. Zepp Health Corp |
| IRobot vs. Meta Materials | IRobot vs. Sphere 3D Corp | IRobot vs. Katapult Holdings | IRobot vs. Aquagold International |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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