Correlation Between Emerson Radio and GoPro
Can any of the company-specific risk be diversified away by investing in both Emerson Radio and GoPro 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 Emerson Radio and GoPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and GoPro Inc, you can compare the effects of market volatilities on Emerson Radio and GoPro 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 Emerson Radio with a short position of GoPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and GoPro.
Diversification Opportunities for Emerson Radio and GoPro
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerson and GoPro is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc and Emerson Radio 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 Emerson Radio are associated (or correlated) with GoPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoPro Inc has no effect on the direction of Emerson Radio i.e., Emerson Radio and GoPro go up and down completely randomly.
Pair Corralation between Emerson Radio and GoPro
Considering the 90-day investment horizon Emerson Radio is expected to generate 1.26 times more return on investment than GoPro. However, Emerson Radio is 1.26 times more volatile than GoPro Inc. It trades about 0.15 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.67 per unit of risk. If you would invest 52.00 in Emerson Radio on January 20, 2024 and sell it today you would earn a total of 4.00 from holding Emerson Radio or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Radio vs. GoPro Inc
Performance |
| Timeline |
| Emerson Radio |
| GoPro Inc |
Emerson Radio and GoPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Radio and GoPro
The main advantage of trading using opposite Emerson Radio and GoPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, GoPro 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 GoPro will offset losses from the drop in GoPro's long position.| Emerson Radio vs. LG Display Co | Emerson Radio vs. The Singing Machine | Emerson Radio vs. Wearable Devices | Emerson Radio vs. Zepp Health Corp |
| GoPro vs. LG Display Co | GoPro vs. The Singing Machine | GoPro vs. Wearable Devices | GoPro vs. Zepp Health Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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