Correlation Between Shenandoah Telecommunicatio and Ooma

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

By analyzing existing cross correlation between Shenandoah Telecommunications Co and Ooma Inc, you can compare the effects of market volatilities on Shenandoah Telecommunicatio and Ooma 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 Shenandoah Telecommunicatio with a short position of Ooma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and Ooma.

Diversification Opportunities for Shenandoah Telecommunicatio and Ooma

0.76

Correlation Coefficient

Shenandoah Telecommunicatio  Ooma

Poor diversification

The 3 months correlation between Shenandoah and Ooma is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and Ooma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ooma Inc and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications Co are associated (or correlated) with Ooma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ooma Inc has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and Ooma go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and Ooma

Given the investment horizon of 90 days Shenandoah Telecommunications Co is expected to generate 0.83 times more return on investment than Ooma. However, Shenandoah Telecommunications Co is 1.2 times less risky than Ooma. It trades about -0.02 of its potential returns per unit of risk. Ooma Inc is currently generating about -0.13 per unit of risk. If you would invest  1,834  in Shenandoah Telecommunications Co on February 28, 2024 and sell it today you would lose (91.00) from holding Shenandoah Telecommunications Co or give up 4.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Shenandoah Telecommunications   vs.  Ooma Inc

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Ooma Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ooma Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenandoah Telecommunicatio and Ooma

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

The idea behind Shenandoah Telecommunications Co and Ooma Inc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.