Correlation Between Ooma and Rogers Communications

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

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

Diversification Opportunities for Ooma and Rogers Communications

-0.05

Correlation Coefficient

Ooma  Rogers Communications

Good diversification

The 3 months correlation between Ooma and Rogers is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ooma Inc and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Ooma i.e., Ooma and Rogers Communications go up and down completely randomly.

Pair Corralation between Ooma and Rogers Communications

Given the investment horizon of 90 days Ooma Inc is expected to generate 1.14 times more return on investment than Rogers Communications. However, Ooma is 1.14 times more volatile than Rogers Communications. It trades about -0.04 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.09 per unit of risk. If you would invest  1,421  in Ooma Inc on December 28, 2024 and sell it today you would lose (75.00) from holding Ooma Inc or give up 5.28% of portfolio value over 90 days.

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

Ooma Inc  vs.  Rogers Communications

Ooma Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ooma Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Ooma is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Rogers Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Ooma and Rogers Communications

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

The idea behind Ooma Inc and Rogers Communications 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.