Correlation Between Turtle Beach and IRobot

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

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

Diversification Opportunities for Turtle Beach and IRobot

-0.57

Correlation Coefficient

Turtle Beach  IRobot

Excellent diversification

The 3 months correlation between Turtle and IRobot is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Turtle Beach Corp and iRobot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRobot and Turtle Beach 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 Turtle Beach Corp 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 Turtle Beach i.e., Turtle Beach and IRobot go up and down completely randomly.

Pair Corralation between Turtle Beach and IRobot

Given the investment horizon of 90 days Turtle Beach Corp is expected to generate 1.07 times more return on investment than IRobot. However, Turtle Beach is 1.07 times more volatile than iRobot. It trades about 0.15 of its potential returns per unit of risk. iRobot is currently generating about -0.24 per unit of risk. If you would invest  1,174  in Turtle Beach Corp on January 18, 2024 and sell it today you would earn a total of  372.00  from holding Turtle Beach Corp or generate 31.69% return on investment over 90 days.

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

Turtle Beach Corp  vs.  iRobot

Turtle Beach Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Turtle Beach Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Turtle Beach reported solid returns over the last few months and may actually be approaching a breakup point.

iRobot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iRobot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Turtle Beach and IRobot

The main advantage of trading using opposite Turtle Beach and IRobot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turtle Beach 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.

The idea behind Turtle Beach Corp and iRobot 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.