Correlation Between GoPro and Apple
Can any of the company-specific risk be diversified away by investing in both GoPro and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoPro Inc and Apple Inc, you can compare the effects of market volatilities on GoPro and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoPro and Apple.
Diversification Opportunities for GoPro and Apple
Very poor diversification
The 3 months correlation between GoPro and Apple is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of GoPro i.e., GoPro and Apple go up and down completely randomly.
Pair Corralation between GoPro and Apple
Given the investment horizon of 90 days GoPro Inc is expected to under-perform the Apple. In addition to that, GoPro is 1.71 times more volatile than Apple Inc. It trades about -0.41 of its total potential returns per unit of risk. Apple Inc is currently generating about -0.01 per unit of volatility. If you would invest 16,971 in Apple Inc on January 26, 2024 and sell it today you would lose (69.00) from holding Apple Inc or give up 0.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
GoPro Inc vs. Apple Inc
Performance |
Timeline |
GoPro Inc |
Apple Inc |
GoPro and Apple Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GoPro and Apple
The main advantage of trading using opposite GoPro and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.GoPro vs. Sony Group Corp | GoPro vs. LG Display Co | GoPro vs. Vizio Holding Corp | GoPro vs. Universal Electronics |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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