Correlation Between Roku and Sirius XM

Can any of the company-specific risk be diversified away by investing in both Roku and Sirius XM 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 Sirius XM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roku Inc and Sirius XM Holding, you can compare the effects of market volatilities on Roku and Sirius XM 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 Sirius XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Sirius XM.

Diversification Opportunities for Roku and Sirius XM

0.81

Correlation Coefficient

Roku  Sirius XM

Very poor diversification

The 3 months correlation between Roku and Sirius is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Sirius XM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holding 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 Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holding has no effect on the direction of Roku i.e., Roku and Sirius XM go up and down completely randomly.

Pair Corralation between Roku and Sirius XM

Given the investment horizon of 90 days Roku Inc is expected to generate 1.27 times more return on investment than Sirius XM. However, Roku is 1.27 times more volatile than Sirius XM Holding. It trades about -0.13 of its potential returns per unit of risk. Sirius XM Holding is currently generating about -0.44 per unit of risk. If you would invest  6,419  in Roku Inc on February 1, 2024 and sell it today you would lose (653.00) from holding Roku Inc or give up 10.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Roku Inc  vs.  Sirius XM Holding

Roku Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roku Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sirius XM Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirius XM Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Roku and Sirius XM

The main advantage of trading using opposite Roku and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.

The idea behind Roku Inc and Sirius XM Holding 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.