Correlation Between Roku and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Roku and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Roku and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Sumitomo Mitsui.
Diversification Opportunities for Roku and Sumitomo Mitsui
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Roku and Sumitomo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Roku i.e., Roku and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Roku and Sumitomo Mitsui
Assuming the 90 days trading horizon Roku Inc is expected to generate 1.44 times more return on investment than Sumitomo Mitsui. However, Roku is 1.44 times more volatile than Sumitomo Mitsui Financial. It trades about 0.14 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.11 per unit of risk. If you would invest 1,475 in Roku Inc on September 13, 2024 and sell it today you would earn a total of 1,011 from holding Roku Inc or generate 68.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Roku Inc vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Roku Inc |
| Sumitomo Mitsui Financial |
Roku and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Sumitomo Mitsui
The main advantage of trading using opposite Roku and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Roku vs. Comcast | Roku vs. Charter Communications | Roku vs. Warner Music Group | Roku vs. Bemobi Mobile Tech |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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