Correlation Between Roku and Bang Olufsen
Can any of the company-specific risk be diversified away by investing in both Roku and Bang Olufsen 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 Bang Olufsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Bang Olufsen, you can compare the effects of market volatilities on Roku and Bang Olufsen 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 Bang Olufsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Bang Olufsen.
Diversification Opportunities for Roku and Bang Olufsen
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Roku and Bang is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Bang Olufsen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bang Olufsen 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 Bang Olufsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bang Olufsen has no effect on the direction of Roku i.e., Roku and Bang Olufsen go up and down completely randomly.
Pair Corralation between Roku and Bang Olufsen
Given the investment horizon of 90 days Roku Inc is expected to generate 2.4 times more return on investment than Bang Olufsen. However, Roku is 2.4 times more volatile than Bang Olufsen. It trades about 0.01 of its potential returns per unit of risk. Bang Olufsen is currently generating about 0.01 per unit of risk. If you would invest 6,118 in Roku Inc on January 20, 2024 and sell it today you would lose (249.00) from holding Roku Inc or give up 4.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roku Inc vs. Bang Olufsen
Performance |
| Timeline |
| Roku Inc |
| Bang Olufsen |
Roku and Bang Olufsen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Bang Olufsen
The main advantage of trading using opposite Roku and Bang Olufsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Bang Olufsen 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 Bang Olufsen will offset losses from the drop in Bang Olufsen's long position.The idea behind Roku Inc and Bang Olufsen 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.| Bang Olufsen vs. SAS AB | Bang Olufsen vs. FLSmidth Co | Bang Olufsen vs. Ambu AS | Bang Olufsen vs. GN Store Nord |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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