Correlation Between Roku and Seven Arts
Can any of the company-specific risk be diversified away by investing in both Roku and Seven Arts 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 Seven Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Seven Arts Entertainment, you can compare the effects of market volatilities on Roku and Seven Arts 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 Seven Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Seven Arts.
Diversification Opportunities for Roku and Seven Arts
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Roku and Seven is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Seven Arts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven Arts Entertainment 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 Seven Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven Arts Entertainment has no effect on the direction of Roku i.e., Roku and Seven Arts go up and down completely randomly.
Pair Corralation between Roku and Seven Arts
Given the investment horizon of 90 days Roku Inc is expected to generate 0.12 times more return on investment than Seven Arts. However, Roku Inc is 8.66 times less risky than Seven Arts. It trades about -0.05 of its potential returns per unit of risk. Seven Arts Entertainment is currently generating about -0.04 per unit of risk. If you would invest 7,843 in Roku Inc on October 20, 2024 and sell it today you would lose (254.00) from holding Roku Inc or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Roku Inc vs. Seven Arts Entertainment
Performance |
| Timeline |
| Roku Inc |
| Seven Arts Entertainment |
Roku and Seven Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Seven Arts
The main advantage of trading using opposite Roku and Seven Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Seven Arts 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 Seven Arts will offset losses from the drop in Seven Arts' 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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