Correlation Between GoPro and Vuzix Corp

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

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

Diversification Opportunities for GoPro and Vuzix Corp

-0.31

Correlation Coefficient

GoPro  Vuzix Corp

Very good diversification

The 3 months correlation between GoPro and Vuzix is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Vuzix Corp Cmn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vuzix Corp Cmn 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 Vuzix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vuzix Corp Cmn has no effect on the direction of GoPro i.e., GoPro and Vuzix Corp go up and down completely randomly.

Pair Corralation between GoPro and Vuzix Corp

Given the investment horizon of 90 days GoPro is expected to generate 25.3 times less return on investment than Vuzix Corp. But when comparing it to its historical volatility, GoPro Inc is 1.95 times less risky than Vuzix Corp. It trades about 0.02 of its potential returns per unit of risk. Vuzix Corp Cmn is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  98.00  in Vuzix Corp Cmn on September 5, 2024 and sell it today you would earn a total of  165.00  from holding Vuzix Corp Cmn or generate 168.37% return on investment over 90 days.

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

GoPro Inc  vs.  Vuzix Corp Cmn

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.

Vuzix Corp Cmn

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vuzix Corp Cmn are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Vuzix Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GoPro and Vuzix Corp

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

The idea behind GoPro Inc and Vuzix Corp Cmn 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.