Correlation Between Maxx Sports and Roku

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

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

Diversification Opportunities for Maxx Sports and Roku

-0.07

Correlation Coefficient

Maxx Sports  Roku

Good diversification

The 3 months correlation between Maxx and Roku is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Maxx Sports TV and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Maxx Sports 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 Maxx Sports TV 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 Maxx Sports i.e., Maxx Sports and Roku go up and down completely randomly.

Pair Corralation between Maxx Sports and Roku

Given the investment horizon of 90 days Maxx Sports TV is expected to under-perform the Roku. In addition to that, Maxx Sports is 4.84 times more volatile than Roku Inc. It trades about -0.21 of its total potential returns per unit of risk. Roku Inc is currently generating about 0.1 per unit of volatility. If you would invest  7,662  in Roku Inc on September 13, 2024 and sell it today you would earn a total of  626.00  from holding Roku Inc or generate 8.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Maxx Sports TV  vs.  Roku Inc

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 uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Roku Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roku Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Roku unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maxx Sports and Roku

The main advantage of trading using opposite Maxx Sports and Roku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxx Sports 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 Maxx Sports TV 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.