Correlation Between Roku and Pandora AS
Can any of the company-specific risk be diversified away by investing in both Roku and Pandora AS 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 Pandora AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Pandora AS, you can compare the effects of market volatilities on Roku and Pandora AS 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 Pandora AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Pandora AS.
Diversification Opportunities for Roku and Pandora AS
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Roku and Pandora is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora AS 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 Pandora AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora AS has no effect on the direction of Roku i.e., Roku and Pandora AS go up and down completely randomly.
Pair Corralation between Roku and Pandora AS
Given the investment horizon of 90 days Roku Inc is expected to under-perform the Pandora AS. In addition to that, Roku is 2.49 times more volatile than Pandora AS. It trades about -0.15 of its total potential returns per unit of risk. Pandora AS is currently generating about 0.12 per unit of volatility. If you would invest 98,900 in Pandora AS on January 24, 2024 and sell it today you would earn a total of 11,400 from holding Pandora AS or generate 11.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roku Inc vs. Pandora AS
Performance |
| Timeline |
| Roku Inc |
| Pandora AS |
Roku and Pandora AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Pandora AS
The main advantage of trading using opposite Roku and Pandora AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Pandora AS 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 Pandora AS will offset losses from the drop in Pandora AS's long position.The idea behind Roku Inc and Pandora AS 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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