Correlation Between Roku and Gaia
Can any of the company-specific risk be diversified away by investing in both Roku and Gaia 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 Gaia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Gaia Inc, you can compare the effects of market volatilities on Roku and Gaia 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 Gaia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Gaia.
Diversification Opportunities for Roku and Gaia
Weak diversification
The 3 months correlation between Roku and Gaia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Gaia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaia Inc 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 Gaia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaia Inc has no effect on the direction of Roku i.e., Roku and Gaia go up and down completely randomly.
Pair Corralation between Roku and Gaia
Given the investment horizon of 90 days Roku Inc is expected to under-perform the Gaia. In addition to that, Roku is 1.78 times more volatile than Gaia Inc. It trades about -0.03 of its total potential returns per unit of risk. Gaia Inc is currently generating about 0.03 per unit of volatility. If you would invest 589.00 in Gaia Inc on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Gaia Inc or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Roku Inc vs. Gaia Inc
Performance |
| Timeline |
| Roku Inc |
| Gaia Inc |
Roku and Gaia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Gaia
The main advantage of trading using opposite Roku and Gaia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Gaia 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 Gaia will offset losses from the drop in Gaia's long position.| Roku vs. Walt Disney | Roku vs. AMC Entertainment Holdings | Roku vs. Paramount Global Class | Roku vs. Warner Bros Discovery |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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