Correlation Between FMC and GoPro

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

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

Diversification Opportunities for FMC and GoPro

0.28

Correlation Coefficient

FMC  GoPro

Modest diversification

The 3 months correlation between FMC and GoPro is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc and FMC 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 FMC Corporation 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 FMC i.e., FMC and GoPro go up and down completely randomly.

Pair Corralation between FMC and GoPro

Considering the 90-day investment horizon FMC Corporation is expected to generate 1.47 times more return on investment than GoPro. However, FMC is 1.47 times more volatile than GoPro Inc. It trades about 0.32 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.13 per unit of risk. If you would invest  4,729  in FMC Corporation on October 20, 2024 and sell it today you would earn a total of  614.00  from holding FMC Corporation or generate 12.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

FMC Corp.  vs.  GoPro Inc

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 FMC and GoPro

The main advantage of trading using opposite FMC and GoPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FMC 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 FMC Corporation 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.