Correlation Between Comcast and Roku

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

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

Diversification Opportunities for Comcast and Roku

0.07

Correlation Coefficient

Comcast  Roku

Significant diversification

The 3 months correlation between Comcast and Roku is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Comcast and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Comcast 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 Comcast 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 Comcast i.e., Comcast and Roku go up and down completely randomly.

Pair Corralation between Comcast and Roku

Assuming the 90 days trading horizon Comcast is expected to under-perform the Roku. But the stock apears to be less risky and, when comparing its historical volatility, Comcast is 1.39 times less risky than Roku. The stock trades about -0.11 of its potential returns per unit of risk. The Roku Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,998  in Roku Inc on September 25, 2024 and sell it today you would earn a total of  446.00  from holding Roku Inc or generate 22.32% return on investment over 90 days.

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

Comcast  vs.  Roku Inc

Comcast

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comcast are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Comcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Roku Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roku Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Roku sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comcast and Roku

The main advantage of trading using opposite Comcast and Roku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comcast 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 Comcast 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.