Correlation Between Affirm Holdings and Roblox Corp
Can any of the company-specific risk be diversified away by investing in both Affirm Holdings and Roblox Corp 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 Affirm Holdings and Roblox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affirm Holdings and Roblox Corp, you can compare the effects of market volatilities on Affirm Holdings and Roblox Corp 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 Affirm Holdings with a short position of Roblox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affirm Holdings and Roblox Corp.
Diversification Opportunities for Affirm Holdings and Roblox Corp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Affirm and Roblox is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Affirm Holdings and Roblox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roblox Corp and Affirm Holdings 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 Affirm Holdings are associated (or correlated) with Roblox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roblox Corp has no effect on the direction of Affirm Holdings i.e., Affirm Holdings and Roblox Corp go up and down completely randomly.
Pair Corralation between Affirm Holdings and Roblox Corp
Given the investment horizon of 90 days Affirm Holdings is expected to generate 1.33 times more return on investment than Roblox Corp. However, Affirm Holdings is 1.33 times more volatile than Roblox Corp. It trades about 0.4 of its potential returns per unit of risk. Roblox Corp is currently generating about 0.17 per unit of risk. If you would invest 4,212 in Affirm Holdings on August 28, 2024 and sell it today you would earn a total of 2,723 from holding Affirm Holdings or generate 64.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affirm Holdings vs. Roblox Corp
Performance |
| Timeline |
| Affirm Holdings |
| Roblox Corp |
Affirm Holdings and Roblox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affirm Holdings and Roblox Corp
The main advantage of trading using opposite Affirm Holdings and Roblox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affirm Holdings position performs unexpectedly, Roblox Corp 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 Roblox Corp will offset losses from the drop in Roblox Corp's long position.| Affirm Holdings vs. Upstart Holdings | Affirm Holdings vs. SoFi Technologies | Affirm Holdings vs. Roblox Corp | Affirm Holdings vs. Robinhood Markets |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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