Correlation Between Sporttotal and Roku
Can any of the company-specific risk be diversified away by investing in both Sporttotal and Roku 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 Sporttotal and Roku into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sporttotal AG and Roku Inc, you can compare the effects of market volatilities on Sporttotal and Roku 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 Sporttotal with a short position of Roku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sporttotal and Roku.
Diversification Opportunities for Sporttotal and Roku
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sporttotal and Roku is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sporttotal AG and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Sporttotal 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 Sporttotal AG are associated (or correlated) with Roku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roku Inc has no effect on the direction of Sporttotal i.e., Sporttotal and Roku go up and down completely randomly.
Pair Corralation between Sporttotal and Roku
Assuming the 90 days trading horizon Sporttotal AG is expected to generate 5.28 times more return on investment than Roku. However, Sporttotal is 5.28 times more volatile than Roku Inc. It trades about 0.09 of its potential returns per unit of risk. Roku Inc is currently generating about -0.01 per unit of risk. If you would invest 24.00 in Sporttotal AG on October 21, 2024 and sell it today you would earn a total of 1.00 from holding Sporttotal AG or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sporttotal AG vs. Roku Inc
Performance |
| Timeline |
| Sporttotal AG |
| Roku Inc |
Sporttotal and Roku Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sporttotal and Roku
The main advantage of trading using opposite Sporttotal and Roku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sporttotal position performs unexpectedly, Roku 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 Roku will offset losses from the drop in Roku's long position.The idea behind Sporttotal AG and Roku Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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