Correlation Between Outbrain and Roku

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

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

Diversification Opportunities for Outbrain and Roku

-0.32

Correlation Coefficient

Outbrain  Roku

Very good diversification

The 3 months correlation between Outbrain and Roku is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Outbrain 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 Outbrain 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 Outbrain i.e., Outbrain and Roku go up and down completely randomly.

Pair Corralation between Outbrain and Roku

Allowing for the 90-day total investment horizon Outbrain is expected to generate 0.89 times more return on investment than Roku. However, Outbrain is 1.13 times less risky than Roku. It trades about 0.35 of its potential returns per unit of risk. Roku Inc is currently generating about 0.09 per unit of risk. If you would invest  440.00  in Outbrain on September 2, 2024 and sell it today you would earn a total of  103.00  from holding Outbrain or generate 23.41% return on investment over 90 days.

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

Outbrain  vs.  Roku Inc

Outbrain

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Outbrain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Roku Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roku Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Roku may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Outbrain and Roku

The main advantage of trading using opposite Outbrain and Roku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outbrain 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 Outbrain 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.