Correlation Between Cable One and Ooma

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

By analyzing existing cross correlation between Cable One and Ooma Inc, you can compare the effects of market volatilities on Cable One and Ooma 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 Cable One with a short position of Ooma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Ooma.

Diversification Opportunities for Cable One and Ooma

0.78

Correlation Coefficient

Cable One  Ooma

Poor diversification

The 3 months correlation between Cable and Ooma is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Ooma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ooma Inc and Cable One 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 Cable One are associated (or correlated) with Ooma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ooma Inc has no effect on the direction of Cable One i.e., Cable One and Ooma go up and down completely randomly.

Pair Corralation between Cable One and Ooma

Given the investment horizon of 90 days Cable One is expected to generate 3.84 times less return on investment than Ooma. But when comparing it to its historical volatility, Cable One is 1.13 times less risky than Ooma. It trades about 0.04 of its potential returns per unit of risk. Ooma Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  912.00  in Ooma Inc on September 29, 2024 and sell it today you would earn a total of  514.00  from holding Ooma Inc or generate 56.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cable One  vs.  Ooma Inc

Cable One

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Cable One may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ooma Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ooma Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Ooma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cable One and Ooma

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

The idea behind Cable One and Ooma 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.