Correlation Between Genius Brands and Roku

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

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

Diversification Opportunities for Genius Brands and Roku

0.0

Correlation Coefficient

Genius Brands  Roku

Pay attention - limited upside

The 3 months correlation between Genius and Roku is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Genius Brands International and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Genius Brands 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 Genius Brands International 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 Genius Brands i.e., Genius Brands and Roku go up and down completely randomly.

Pair Corralation between Genius Brands and Roku

If you would invest  7,361  in Roku Inc on November 19, 2024 and sell it today you would earn a total of  2,546  from holding Roku Inc or generate 34.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Genius Brands International  vs.  Roku Inc

Genius Brands Intern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genius Brands International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Genius Brands is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Roku Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roku Inc are ranked lower than 11 (%) 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 Genius Brands and Roku

The main advantage of trading using opposite Genius Brands and Roku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genius Brands 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 Genius Brands International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.