Correlation Between Roku and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Roku and Consumer Staples 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 Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Consumer Staples Select, you can compare the effects of market volatilities on Roku and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Consumer Staples.
Diversification Opportunities for Roku and Consumer Staples
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Roku and Consumer is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Consumer Staples Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Select 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Select has no effect on the direction of Roku i.e., Roku and Consumer Staples go up and down completely randomly.
Pair Corralation between Roku and Consumer Staples
Given the investment horizon of 90 days Roku Inc is expected to under-perform the Consumer Staples. In addition to that, Roku is 3.83 times more volatile than Consumer Staples Select. It trades about -0.08 of its total potential returns per unit of risk. Consumer Staples Select is currently generating about 0.05 per unit of volatility. If you would invest 7,547 in Consumer Staples Select on January 26, 2024 and sell it today you would earn a total of 46.00 from holding Consumer Staples Select or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Roku Inc vs. Consumer Staples Select
Performance |
| Timeline |
| Roku Inc |
| Consumer Staples Select |
Roku and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and Consumer Staples
The main advantage of trading using opposite Roku and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.The idea behind Roku Inc and Consumer Staples Select 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.| Consumer Staples vs. Fidelity MSCI Utilities | Consumer Staples vs. Fidelity MSCI Industrials | Consumer Staples vs. Fidelity MSCI Consumer | Consumer Staples vs. Fidelity MSCI Communication |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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