Correlation Between Roku and Spar Nord
Can any of the company-specific risk be diversified away by investing in both Roku and Spar Nord 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 Spar Nord into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Spar Nord Bank, you can compare the effects of market volatilities on Roku and Spar Nord 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 Spar Nord. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Spar Nord.
Diversification Opportunities for Roku and Spar Nord
Pay attention - limited upside
The 3 months correlation between Roku and Spar is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Spar Nord Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spar Nord Bank 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 Spar Nord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spar Nord Bank has no effect on the direction of Roku i.e., Roku and Spar Nord go up and down completely randomly.
Pair Corralation between Roku and Spar Nord
Given the investment horizon of 90 days Roku Inc is expected to under-perform the Spar Nord. In addition to that, Roku is 2.59 times more volatile than Spar Nord Bank. It trades about 0.0 of its total potential returns per unit of risk. Spar Nord Bank is currently generating about 0.06 per unit of volatility. If you would invest 7,608 in Spar Nord Bank on January 20, 2024 and sell it today you would earn a total of 4,632 from holding Spar Nord Bank or generate 60.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Roku Inc vs. Spar Nord Bank
Performance |
| Timeline |
| Roku Inc |
| Spar Nord Bank |
Roku and Spar Nord Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Spar Nord
The main advantage of trading using opposite Roku and Spar Nord positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Spar Nord 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 Spar Nord will offset losses from the drop in Spar Nord's long position.The idea behind Roku Inc and Spar Nord Bank 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.| Spar Nord vs. Sydbank AS | Spar Nord vs. Jyske Bank AS | Spar Nord vs. Alm Brand | Spar Nord vs. Topdanmark AS |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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