Correlation Between Roku and American Picture

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

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

Diversification Opportunities for Roku and American Picture

0.19

Correlation Coefficient

Roku  American Picture

Average diversification

The 3 months correlation between Roku and American is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and American Picture House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Picture House 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 American Picture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Picture House has no effect on the direction of Roku i.e., Roku and American Picture go up and down completely randomly.

Pair Corralation between Roku and American Picture

Given the investment horizon of 90 days Roku Inc is expected to generate 0.61 times more return on investment than American Picture. However, Roku Inc is 1.63 times less risky than American Picture. It trades about 0.03 of its potential returns per unit of risk. American Picture House is currently generating about -0.01 per unit of risk. If you would invest  7,489  in Roku Inc on December 28, 2024 and sell it today you would earn a total of  116.00  from holding Roku Inc or generate 1.55% return on investment over 90 days.

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

Roku Inc  vs.  American Picture House

Roku Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Roku Inc are ranked lower than 2 (%) 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 April 2025.

American Picture House

Risk-Adjusted Performance

Weak

Over the last 90 days American Picture House has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, American Picture is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Roku and American Picture

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

The idea behind Roku Inc and American Picture House 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.