Correlation Between GoPro and National Bank
Can any of the company-specific risk be diversified away by investing in both GoPro and National Bank 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 GoPro and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoPro Inc and National Bank Holdings, you can compare the effects of market volatilities on GoPro and National Bank 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 GoPro with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoPro and National Bank.
Diversification Opportunities for GoPro and National Bank
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GoPro and National is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings and GoPro 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 GoPro Inc are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of GoPro i.e., GoPro and National Bank go up and down completely randomly.
Pair Corralation between GoPro and National Bank
Given the investment horizon of 90 days GoPro Inc is expected to under-perform the National Bank. In addition to that, GoPro is 1.16 times more volatile than National Bank Holdings. It trades about -0.45 of its total potential returns per unit of risk. National Bank Holdings is currently generating about -0.02 per unit of volatility. If you would invest 3,160 in National Bank Holdings on January 25, 2024 and sell it today you would lose (40.00) from holding National Bank Holdings or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
GoPro Inc vs. National Bank Holdings
Performance |
| Timeline |
| GoPro Inc |
| National Bank Holdings |
GoPro and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoPro and National Bank
The main advantage of trading using opposite GoPro and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| GoPro vs. Sony Group Corp | GoPro vs. LG Display Co | GoPro vs. Vizio Holding Corp | GoPro vs. Universal Electronics |
| National Bank vs. Regions Financial | National Bank vs. KeyCorp | National Bank vs. Superior Plus Corp | National Bank vs. Origin Agritech |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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