Correlation Between Roku and Paramount Global
Can any of the company-specific risk be diversified away by investing in both Roku and Paramount Global 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 Paramount Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Paramount Global Class, you can compare the effects of market volatilities on Roku and Paramount Global 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 Paramount Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Paramount Global.
Diversification Opportunities for Roku and Paramount Global
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Roku and Paramount is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global 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 Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of Roku i.e., Roku and Paramount Global go up and down completely randomly.
Pair Corralation between Roku and Paramount Global
Given the investment horizon of 90 days Roku Inc is expected to under-perform the Paramount Global. In addition to that, Roku is 3.18 times more volatile than Paramount Global Class. It trades about -0.06 of its total potential returns per unit of risk. Paramount Global Class is currently generating about 0.13 per unit of volatility. If you would invest 2,177 in Paramount Global Class on August 27, 2024 and sell it today you would earn a total of 90.00 from holding Paramount Global Class or generate 4.13% 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. Paramount Global Class
Performance |
| Timeline |
| Roku Inc |
| Paramount Global Class |
Roku and Paramount Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Paramount Global
The main advantage of trading using opposite Roku and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Paramount Global 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 Paramount Global will offset losses from the drop in Paramount Global's long position.| Roku vs. Walt Disney | Roku vs. AMC Entertainment Holdings | Roku vs. Paramount Global Class | Roku vs. Warner Bros Discovery |
| Paramount Global vs. Fox Corp Class | Paramount Global vs. News Corp A | Paramount Global vs. News Corp B | Paramount Global vs. Liberty Media |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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