Correlation Between Apple and GoPro

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

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

Diversification Opportunities for Apple and GoPro

-0.05

Correlation Coefficient

Apple  GoPro

Good diversification

The 3 months correlation between Apple and GoPro is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc and Apple 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 Apple Inc 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 Apple i.e., Apple and GoPro go up and down completely randomly.

Pair Corralation between Apple and GoPro

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.42 times more return on investment than GoPro. However, Apple Inc is 2.38 times less risky than GoPro. It trades about 0.48 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.06 per unit of risk. If you would invest  6,681  in Apple Inc on September 23, 2024 and sell it today you would earn a total of  1,056  from holding Apple Inc or generate 15.81% return on investment over 90 days.

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

Apple Inc  vs.  GoPro Inc

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

GoPro Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoPro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GoPro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and GoPro

The main advantage of trading using opposite Apple and GoPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.

The idea behind Apple Inc and GoPro 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.