Correlation Between Ooma and Cable One

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

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

Diversification Opportunities for Ooma and Cable One

0.78

Correlation Coefficient

Ooma  Cable One

Poor diversification

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

Pair Corralation between Ooma and Cable One

Given the investment horizon of 90 days Ooma Inc is expected to generate 1.13 times more return on investment than Cable One. However, Ooma is 1.13 times more volatile than Cable One. It trades about 0.12 of its potential returns per unit of risk. Cable One is currently generating about 0.04 per unit of risk. 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

Ooma Inc  vs.  Cable One

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.

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.

Pair Trading with Ooma and Cable One

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

The idea behind Ooma Inc and Cable One 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.