Correlation Between Roku and SNM Gobal
Can any of the company-specific risk be diversified away by investing in both Roku and SNM Gobal 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 SNM Gobal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and SNM Gobal Holdings, you can compare the effects of market volatilities on Roku and SNM Gobal 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 SNM Gobal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and SNM Gobal.
Diversification Opportunities for Roku and SNM Gobal
Average diversification
The 3 months correlation between Roku and SNM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and SNM Gobal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNM Gobal Holdings 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 SNM Gobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNM Gobal Holdings has no effect on the direction of Roku i.e., Roku and SNM Gobal go up and down completely randomly.
Pair Corralation between Roku and SNM Gobal
Given the investment horizon of 90 days Roku is expected to generate 268.76 times less return on investment than SNM Gobal. But when comparing it to its historical volatility, Roku Inc is 104.35 times less risky than SNM Gobal. It trades about 0.14 of its potential returns per unit of risk. SNM Gobal Holdings is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 0.01 in SNM Gobal Holdings on November 1, 2024 and sell it today you would lose (0.01) from holding SNM Gobal Holdings or give up 100.0% 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. SNM Gobal Holdings
Performance |
| Timeline |
| Roku Inc |
| SNM Gobal Holdings |
Roku and SNM Gobal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and SNM Gobal
The main advantage of trading using opposite Roku and SNM Gobal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, SNM Gobal 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 SNM Gobal will offset losses from the drop in SNM Gobal'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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