Correlation Between Roku and Cumulus Media
Can any of the company-specific risk be diversified away by investing in both Roku and Cumulus Media 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 Cumulus Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Cumulus Media Class, you can compare the effects of market volatilities on Roku and Cumulus Media 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 Cumulus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Cumulus Media.
Diversification Opportunities for Roku and Cumulus Media
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Roku and Cumulus is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Cumulus Media Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumulus Media Class 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 Cumulus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumulus Media Class has no effect on the direction of Roku i.e., Roku and Cumulus Media go up and down completely randomly.
Pair Corralation between Roku and Cumulus Media
Given the investment horizon of 90 days Roku Inc is expected to generate 0.91 times more return on investment than Cumulus Media. However, Roku Inc is 1.1 times less risky than Cumulus Media. It trades about 0.02 of its potential returns per unit of risk. Cumulus Media Class is currently generating about -0.07 per unit of risk. If you would invest 6,910 in Roku Inc on August 31, 2024 and sell it today you would lose (7.00) from holding Roku Inc or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roku Inc vs. Cumulus Media Class
Performance |
| Timeline |
| Roku Inc |
| Cumulus Media Class |
Roku and Cumulus Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Cumulus Media
The main advantage of trading using opposite Roku and Cumulus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Cumulus Media 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 Cumulus Media will offset losses from the drop in Cumulus Media's long position.The idea behind Roku Inc and Cumulus Media Class 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.| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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