Correlation Between Roblox Corp and Affirm Holdings
Can any of the company-specific risk be diversified away by investing in both Roblox Corp and Affirm Holdings 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 Roblox Corp and Affirm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roblox Corp and Affirm Holdings, you can compare the effects of market volatilities on Roblox Corp and Affirm Holdings 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 Roblox Corp with a short position of Affirm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roblox Corp and Affirm Holdings.
Diversification Opportunities for Roblox Corp and Affirm Holdings
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Roblox and Affirm is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Roblox Corp and Affirm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affirm Holdings and Roblox Corp 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 Roblox Corp are associated (or correlated) with Affirm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affirm Holdings has no effect on the direction of Roblox Corp i.e., Roblox Corp and Affirm Holdings go up and down completely randomly.
Pair Corralation between Roblox Corp and Affirm Holdings
Given the investment horizon of 90 days Roblox Corp is expected to generate 3.15 times less return on investment than Affirm Holdings. But when comparing it to its historical volatility, Roblox Corp is 1.33 times less risky than Affirm Holdings. It trades about 0.17 of its potential returns per unit of risk. Affirm Holdings is currently generating about 0.4 of returns per unit of risk over similar time horizon. 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 |
Roblox Corp vs. Affirm Holdings
Performance |
| Timeline |
| Roblox Corp |
| Affirm Holdings |
Roblox Corp and Affirm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roblox Corp and Affirm Holdings
The main advantage of trading using opposite Roblox Corp and Affirm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roblox Corp position performs unexpectedly, Affirm Holdings 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 Affirm Holdings will offset losses from the drop in Affirm Holdings' long position.| Roblox Corp vs. Electronic Arts | Roblox Corp vs. Take Two Interactive Software | Roblox Corp vs. Nintendo Co ADR | Roblox Corp vs. NetEase |
| Affirm Holdings vs. Upstart Holdings | Affirm Holdings vs. SoFi Technologies | Affirm Holdings vs. Roblox Corp | Affirm Holdings vs. Robinhood Markets |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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