Correlation Between Roku and Sack Lunch

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

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

Diversification Opportunities for Roku and Sack Lunch

0.46

Correlation Coefficient

Roku  Sack Lunch

Very weak diversification

The 3 months correlation between Roku and Sack is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Sack Lunch Productions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sack Lunch Productions 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 Sack Lunch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sack Lunch Productions has no effect on the direction of Roku i.e., Roku and Sack Lunch go up and down completely randomly.

Pair Corralation between Roku and Sack Lunch

Given the investment horizon of 90 days Roku Inc is expected to generate 0.21 times more return on investment than Sack Lunch. However, Roku Inc is 4.65 times less risky than Sack Lunch. It trades about 0.02 of its potential returns per unit of risk. Sack Lunch Productions is currently generating about -0.05 per unit of risk. If you would invest  7,910  in Roku Inc on December 4, 2024 and sell it today you would earn a total of  25.00  from holding Roku Inc or generate 0.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Roku Inc  vs.  Sack Lunch Productions

Roku Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Roku Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Sack Lunch Productions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sack Lunch Productions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Sack Lunch disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roku and Sack Lunch

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

The idea behind Roku Inc and Sack Lunch Productions 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..