Correlation Between Roku and Maxx Sports

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

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

Diversification Opportunities for Roku and Maxx Sports

-0.31

Correlation Coefficient

Roku  Maxx Sports

Very good diversification

The 3 months correlation between Roku and Maxx is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Maxx Sports TV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxx Sports TV and Roku 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 Roku Inc are associated (or correlated) with Maxx Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxx Sports TV has no effect on the direction of Roku i.e., Roku and Maxx Sports go up and down completely randomly.

Pair Corralation between Roku and Maxx Sports

Given the investment horizon of 90 days Roku is expected to generate 5.84 times less return on investment than Maxx Sports. But when comparing it to its historical volatility, Roku Inc is 6.51 times less risky than Maxx Sports. It trades about 0.04 of its potential returns per unit of risk. Maxx Sports TV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Maxx Sports TV on October 22, 2024 and sell it today you would lose (6.97) from holding Maxx Sports TV or give up 99.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

Roku Inc  vs.  Maxx Sports TV

Roku Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Roku Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Roku is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Maxx Sports TV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxx Sports TV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Roku and Maxx Sports

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

The idea behind Roku Inc and Maxx Sports TV 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.