Correlation Between Roku and WideOpenWest
Can any of the company-specific risk be diversified away by investing in both Roku and WideOpenWest 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 WideOpenWest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and WideOpenWest, you can compare the effects of market volatilities on Roku and WideOpenWest 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 WideOpenWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and WideOpenWest.
Diversification Opportunities for Roku and WideOpenWest
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Roku and WideOpenWest is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and WideOpenWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WideOpenWest 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 WideOpenWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WideOpenWest has no effect on the direction of Roku i.e., Roku and WideOpenWest go up and down completely randomly.
Pair Corralation between Roku and WideOpenWest
Assuming the 90 days horizon Roku Inc is expected to under-perform the WideOpenWest. But the stock apears to be less risky and, when comparing its historical volatility, Roku Inc is 1.17 times less risky than WideOpenWest. The stock trades about -0.03 of its potential returns per unit of risk. The WideOpenWest is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 390.00 in WideOpenWest on August 25, 2024 and sell it today you would earn a total of 96.00 from holding WideOpenWest or generate 24.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roku Inc vs. WideOpenWest
Performance |
| Timeline |
| Roku Inc |
| WideOpenWest |
Roku and WideOpenWest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and WideOpenWest
The main advantage of trading using opposite Roku and WideOpenWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, WideOpenWest 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 WideOpenWest will offset losses from the drop in WideOpenWest's long position.The idea behind Roku Inc and WideOpenWest 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.| WideOpenWest vs. Comcast | WideOpenWest vs. Liberty Broadband | WideOpenWest vs. Liberty Broadband | WideOpenWest vs. Roku Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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