Correlation Between Roku and Hollywood Intermediate

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

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

Diversification Opportunities for Roku and Hollywood Intermediate

0.0

Correlation Coefficient

Roku  Hollywood Intermediate

Pay attention - limited upside

The 3 months correlation between Roku and Hollywood is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Hollywood Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Intermediate 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 Hollywood Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Intermediate has no effect on the direction of Roku i.e., Roku and Hollywood Intermediate go up and down completely randomly.

Pair Corralation between Roku and Hollywood Intermediate

If you would invest  6,822  in Roku Inc on October 25, 2024 and sell it today you would earn a total of  1,138  from holding Roku Inc or generate 16.68% return on investment over 90 days.

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

Roku Inc  vs.  Hollywood Intermediate

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 February 2025.

Hollywood Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollywood Intermediate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Hollywood Intermediate is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Roku and Hollywood Intermediate

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

The idea behind Roku Inc and Hollywood Intermediate 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 Stocks Directory module to find actively traded stocks across global markets.