Correlation Between Charter Communications and Roebuck Food

Can any of the company-specific risk be diversified away by investing in both Charter Communications and Roebuck Food 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 Charter Communications and Roebuck Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charter Communications Cl and Roebuck Food Group, you can compare the effects of market volatilities on Charter Communications and Roebuck Food 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 Charter Communications with a short position of Roebuck Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Roebuck Food.

Diversification Opportunities for Charter Communications and Roebuck Food

0.46

Correlation Coefficient

Charter Communications  Roebuck Food

Very weak diversification

The 3 months correlation between Charter and Roebuck is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Roebuck Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roebuck Food Group and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Roebuck Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roebuck Food Group has no effect on the direction of Charter Communications i.e., Charter Communications and Roebuck Food go up and down completely randomly.

Pair Corralation between Charter Communications and Roebuck Food

Assuming the 90 days trading horizon Charter Communications Cl is expected to generate 3.38 times more return on investment than Roebuck Food. However, Charter Communications is 3.38 times more volatile than Roebuck Food Group. It trades about 0.13 of its potential returns per unit of risk. Roebuck Food Group is currently generating about 0.14 per unit of risk. If you would invest  33,175  in Charter Communications Cl on September 4, 2024 and sell it today you would earn a total of  6,435  from holding Charter Communications Cl or generate 19.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Charter Communications Cl  vs.  Roebuck Food Group

Charter Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Roebuck Food Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roebuck Food Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Roebuck Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Charter Communications and Roebuck Food

The main advantage of trading using opposite Charter Communications and Roebuck Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Roebuck Food 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 Roebuck Food will offset losses from the drop in Roebuck Food's long position.

The idea behind Charter Communications Cl and Roebuck Food Group 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.