Correlation Between Roku and Warner Bros
Can any of the company-specific risk be diversified away by investing in both Roku and Warner Bros 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 Warner Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Warner Bros Discovery, you can compare the effects of market volatilities on Roku and Warner Bros 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 Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Warner Bros.
Diversification Opportunities for Roku and Warner Bros
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Roku and Warner is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery 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 Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of Roku i.e., Roku and Warner Bros go up and down completely randomly.
Pair Corralation between Roku and Warner Bros
Given the investment horizon of 90 days Roku Inc is expected to generate 1.39 times more return on investment than Warner Bros. However, Roku is 1.39 times more volatile than Warner Bros Discovery. It trades about 0.24 of its potential returns per unit of risk. Warner Bros Discovery is currently generating about 0.0 per unit of risk. If you would invest 7,449 in Roku Inc on November 2, 2024 and sell it today you would earn a total of 1,079 from holding Roku Inc or generate 14.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roku Inc vs. Warner Bros Discovery
Performance |
| Timeline |
| Roku Inc |
| Warner Bros Discovery |
Roku and Warner Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Warner Bros
The main advantage of trading using opposite Roku and Warner Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Warner Bros 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 Warner Bros will offset losses from the drop in Warner Bros' long position.| Roku vs. Walt Disney | Roku vs. AMC Entertainment Holdings | Roku vs. Paramount Global Class | Roku vs. Warner Bros Discovery |
| Warner Bros vs. Walt Disney | Warner Bros vs. Roku Inc | Warner Bros vs. Netflix | Warner Bros vs. Paramount Global Class |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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