Correlation Between Allstate and Root

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

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

Diversification Opportunities for Allstate and Root

-0.65

Correlation Coefficient

Allstate  Root

Excellent diversification

The 3 months correlation between Allstate and Root is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and Root Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Root Inc and Allstate 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 The Allstate 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 Allstate i.e., Allstate and Root go up and down completely randomly.

Pair Corralation between Allstate and Root

Assuming the 90 days trading horizon The Allstate is expected to generate 0.12 times more return on investment than Root. However, The Allstate is 8.04 times less risky than Root. It trades about 0.15 of its potential returns per unit of risk. Root Inc is currently generating about -0.05 per unit of risk. If you would invest  2,580  in The Allstate on May 3, 2025 and sell it today you would earn a total of  112.00  from holding The Allstate or generate 4.34% return on investment over 90 days.

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

The Allstate  vs.  Root Inc

Allstate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady essential indicators, Allstate is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Root Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Root Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Allstate and Root

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

The idea behind The Allstate and Root Inc 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.