Correlation Between GoPro and World Technology

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

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

Diversification Opportunities for GoPro and World Technology

-0.29

Correlation Coefficient

GoPro  World Technology

Very good diversification

The 3 months correlation between GoPro and World is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and World Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Technology Corp 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 World Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Technology Corp has no effect on the direction of GoPro i.e., GoPro and World Technology go up and down completely randomly.

Pair Corralation between GoPro and World Technology

Given the investment horizon of 90 days GoPro Inc is expected to generate 0.29 times more return on investment than World Technology. However, GoPro Inc is 3.4 times less risky than World Technology. It trades about 0.02 of its potential returns per unit of risk. World Technology Corp is currently generating about 0.0 per unit of risk. If you would invest  126.00  in GoPro Inc on September 5, 2024 and sell it today you would lose (1.00) from holding GoPro Inc or give up 0.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

GoPro Inc  vs.  World Technology Corp

GoPro Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoPro Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, GoPro is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

World Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, World Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GoPro and World Technology

The main advantage of trading using opposite GoPro and World Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro position performs unexpectedly, World Technology 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 World Technology will offset losses from the drop in World Technology's long position.

The idea behind GoPro Inc and World Technology Corp 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.