Correlation Between Sycamore Entmt and Roku

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

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

Diversification Opportunities for Sycamore Entmt and Roku

-0.21

Correlation Coefficient

Sycamore Entmt  Roku

Very good diversification

The 3 months correlation between Sycamore and Roku is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sycamore Entmt Grp and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Sycamore Entmt 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 Sycamore Entmt Grp are associated (or correlated) with Roku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roku Inc has no effect on the direction of Sycamore Entmt i.e., Sycamore Entmt and Roku go up and down completely randomly.

Pair Corralation between Sycamore Entmt and Roku

Given the investment horizon of 90 days Sycamore Entmt Grp is expected to generate 3.41 times more return on investment than Roku. However, Sycamore Entmt is 3.41 times more volatile than Roku Inc. It trades about 0.03 of its potential returns per unit of risk. Roku Inc is currently generating about 0.01 per unit of risk. If you would invest  0.10  in Sycamore Entmt Grp on December 27, 2024 and sell it today you would lose (0.03) from holding Sycamore Entmt Grp or give up 30.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Sycamore Entmt Grp  vs.  Roku Inc

Sycamore Entmt Grp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sycamore Entmt Grp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Sycamore Entmt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Roku Inc

Risk-Adjusted Performance

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.

Pair Trading with Sycamore Entmt and Roku

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

The idea behind Sycamore Entmt Grp and Roku Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..