Correlation Between Roku and Cable One
Can any of the company-specific risk be diversified away by investing in both Roku and Cable One 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 Roku and Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Cable One, you can compare the effects of market volatilities on Roku and Cable One 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 Roku with a short position of Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Cable One.
Diversification Opportunities for Roku and Cable One
Significant diversification
The 3 months correlation between Roku and Cable is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Roku 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 Roku Inc are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Roku i.e., Roku and Cable One go up and down completely randomly.
Pair Corralation between Roku and Cable One
Assuming the 90 days trading horizon Roku is expected to generate 317.95 times less return on investment than Cable One. In addition to that, Roku is 1.41 times more volatile than Cable One. It trades about 0.0 of its total potential returns per unit of risk. Cable One is currently generating about 0.25 per unit of volatility. If you would invest 956.00 in Cable One on August 30, 2024 and sell it today you would earn a total of 268.00 from holding Cable One or generate 28.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roku Inc vs. Cable One
Performance |
| Timeline |
| Roku Inc |
| Cable One |
Roku and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Cable One
The main advantage of trading using opposite Roku and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.The idea behind Roku Inc and Cable One 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.| Cable One vs. Unity Software | Cable One vs. Verizon Communications | Cable One vs. Paycom Software | Cable One vs. Extra Space Storage |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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