Correlation Between Roku and Mediaco Holding

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

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

Diversification Opportunities for Roku and Mediaco Holding

-0.54

Correlation Coefficient

Roku  Mediaco Holding

Excellent diversification

The 3 months correlation between Roku and Mediaco is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Mediaco Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mediaco Holding 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 Mediaco Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mediaco Holding has no effect on the direction of Roku i.e., Roku and Mediaco Holding go up and down completely randomly.

Pair Corralation between Roku and Mediaco Holding

Given the investment horizon of 90 days Roku Inc is expected to generate 0.35 times more return on investment than Mediaco Holding. However, Roku Inc is 2.89 times less risky than Mediaco Holding. It trades about 0.04 of its potential returns per unit of risk. Mediaco Holding is currently generating about -0.1 per unit of risk. If you would invest  6,522  in Roku Inc on September 2, 2024 and sell it today you would earn a total of  381.00  from holding Roku Inc or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Roku Inc  vs.  Mediaco Holding

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 January 2025.

Mediaco Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mediaco Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat 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.

Pair Trading with Roku and Mediaco Holding

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

The idea behind Roku Inc and Mediaco Holding 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.