Correlation Between Eline Entertainment and Roku

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

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

Diversification Opportunities for Eline Entertainment and Roku

-0.05

Correlation Coefficient

Eline Entertainment  Roku

Good diversification

The 3 months correlation between Eline and Roku is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eline Entertainment Group and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Eline Entertainment 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 Eline Entertainment Group 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 Eline Entertainment i.e., Eline Entertainment and Roku go up and down completely randomly.

Pair Corralation between Eline Entertainment and Roku

Given the investment horizon of 90 days Eline Entertainment Group is expected to generate 8.74 times more return on investment than Roku. However, Eline Entertainment is 8.74 times more volatile than Roku Inc. It trades about 0.12 of its potential returns per unit of risk. Roku Inc is currently generating about 0.02 per unit of risk. If you would invest  0.05  in Eline Entertainment Group on September 12, 2024 and sell it today you would lose (0.03) from holding Eline Entertainment Group or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Eline Entertainment Group  vs.  Roku Inc

Eline Entertainment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eline Entertainment Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, Eline Entertainment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Roku Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roku Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Roku unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eline Entertainment and Roku

The main advantage of trading using opposite Eline Entertainment and Roku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eline Entertainment 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 Eline Entertainment Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.