Correlation Between Roku and Liberty Latin
Can any of the company-specific risk be diversified away by investing in both Roku and Liberty Latin 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 Liberty Latin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Liberty Latin America, you can compare the effects of market volatilities on Roku and Liberty Latin 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 Liberty Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Liberty Latin.
Diversification Opportunities for Roku and Liberty Latin
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Roku and Liberty is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Liberty Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Latin America 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 Liberty Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Latin America has no effect on the direction of Roku i.e., Roku and Liberty Latin go up and down completely randomly.
Pair Corralation between Roku and Liberty Latin
Given the investment horizon of 90 days Roku Inc is expected to under-perform the Liberty Latin. In addition to that, Roku is 1.03 times more volatile than Liberty Latin America. It trades about -0.08 of its total potential returns per unit of risk. Liberty Latin America is currently generating about 0.18 per unit of volatility. If you would invest 689.00 in Liberty Latin America on January 26, 2024 and sell it today you would earn a total of 58.00 from holding Liberty Latin America or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roku Inc vs. Liberty Latin America
Performance |
| Timeline |
| Roku Inc |
| Liberty Latin America |
Roku and Liberty Latin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Liberty Latin
The main advantage of trading using opposite Roku and Liberty Latin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Liberty Latin 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 Liberty Latin will offset losses from the drop in Liberty Latin's long position.The idea behind Roku Inc and Liberty Latin America 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.| Liberty Latin vs. Liberty Global PLC | Liberty Latin vs. Liberty Global PLC | Liberty Latin vs. Liberty Broadband Srs | Liberty Latin vs. KT Corporation |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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