Correlation Between GoPro and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both GoPro and Emerson Radio 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 Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoPro Inc and Emerson Radio, you can compare the effects of market volatilities on GoPro and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoPro and Emerson Radio.
Diversification Opportunities for GoPro and Emerson Radio
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between GoPro and Emerson is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of GoPro i.e., GoPro and Emerson Radio go up and down completely randomly.
Pair Corralation between GoPro and Emerson Radio
Given the investment horizon of 90 days GoPro Inc is expected to under-perform the Emerson Radio. But the stock apears to be less risky and, when comparing its historical volatility, GoPro Inc is 3.55 times less risky than Emerson Radio. The stock trades about -0.29 of its potential returns per unit of risk. The Emerson Radio is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Emerson Radio on November 3, 2024 and sell it today you would earn a total of 7.00 from holding Emerson Radio or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoPro Inc vs. Emerson Radio
Performance |
| Timeline |
| GoPro Inc |
| Emerson Radio |
GoPro and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoPro and Emerson Radio
The main advantage of trading using opposite GoPro and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| GoPro vs. Sony Group Corp | GoPro vs. LG Display Co | GoPro vs. Universal Electronics | GoPro vs. VOXX International |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Koss Corporation | Emerson Radio vs. Wearable Devices |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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