Correlation Between Liberty Media and Roku
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Roku 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 Liberty Media and Roku into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Roku Inc, you can compare the effects of market volatilities on Liberty Media and Roku 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 Liberty Media with a short position of Roku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Roku.
Diversification Opportunities for Liberty Media and Roku
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Roku is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Liberty Media 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 Liberty Media are associated (or correlated) with Roku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roku Inc has no effect on the direction of Liberty Media i.e., Liberty Media and Roku go up and down completely randomly.
Pair Corralation between Liberty Media and Roku
Assuming the 90 days horizon Liberty Media is expected to generate 1.29 times less return on investment than Roku. But when comparing it to its historical volatility, Liberty Media is 2.9 times less risky than Roku. It trades about 0.19 of its potential returns per unit of risk. Roku Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,799 in Roku Inc on November 8, 2024 and sell it today you would earn a total of 366.00 from holding Roku Inc or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media vs. Roku Inc
Performance |
| Timeline |
| Liberty Media |
| Roku Inc |
Liberty Media and Roku Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Roku
The main advantage of trading using opposite Liberty Media and Roku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Roku 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 Roku will offset losses from the drop in Roku's long position.| Liberty Media vs. Atlanta Braves Holdings, | Liberty Media vs. Madison Square Garden | Liberty Media vs. News Corp B | Liberty Media vs. News Corp A |
| Roku vs. Walt Disney | Roku vs. AMC Entertainment Holdings | Roku vs. Paramount Global Class | Roku vs. Warner Bros Discovery |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |