Correlation Between Sinclair Broadcast and Roku

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

By analyzing existing cross correlation between Sinclair Broadcast Group and Roku Inc, you can compare the effects of market volatilities on Sinclair Broadcast and Roku 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 Sinclair Broadcast with a short position of Roku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinclair Broadcast and Roku.

Diversification Opportunities for Sinclair Broadcast and Roku

0.67

Correlation Coefficient

Sinclair Broadcast  Roku

Poor diversification

The 3 months correlation between Sinclair and Roku is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sinclair Broadcast Group and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc and Sinclair Broadcast 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 Sinclair Broadcast Group are associated (or correlated) with Roku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roku Inc has no effect on the direction of Sinclair Broadcast i.e., Sinclair Broadcast and Roku go up and down completely randomly.

Pair Corralation between Sinclair Broadcast and Roku

Given the investment horizon of 90 days Sinclair Broadcast Group is expected to generate 0.77 times more return on investment than Roku. However, Sinclair Broadcast Group is 1.3 times less risky than Roku. It trades about 0.13 of its potential returns per unit of risk. Roku Inc is currently generating about -0.02 per unit of risk. If you would invest  1,247  in Sinclair Broadcast Group on February 7, 2024 and sell it today you would earn a total of  86.00  from holding Sinclair Broadcast Group or generate 6.9% return on investment over 90 days.

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

Sinclair Broadcast Group  vs.  Roku Inc

Sinclair Broadcast

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinclair Broadcast Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Sinclair Broadcast may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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 weak 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.

Pair Trading with Sinclair Broadcast and Roku

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

The idea behind Sinclair Broadcast Group and Roku 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.