Correlation Between GoPro and Universal Electronics
Can any of the company-specific risk be diversified away by investing in both GoPro and Universal Electronics 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 Universal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoPro Inc and Universal Electronics, you can compare the effects of market volatilities on GoPro and Universal Electronics 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 Universal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoPro and Universal Electronics.
Diversification Opportunities for GoPro and Universal Electronics
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GoPro and Universal is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Universal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Electronics 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 Universal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Electronics has no effect on the direction of GoPro i.e., GoPro and Universal Electronics go up and down completely randomly.
Pair Corralation between GoPro and Universal Electronics
Given the investment horizon of 90 days GoPro Inc is expected to under-perform the Universal Electronics. In addition to that, GoPro is 1.05 times more volatile than Universal Electronics. It trades about -0.29 of its total potential returns per unit of risk. Universal Electronics is currently generating about -0.21 per unit of volatility. If you would invest 1,089 in Universal Electronics on November 3, 2024 and sell it today you would lose (89.00) from holding Universal Electronics or give up 8.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoPro Inc vs. Universal Electronics
Performance |
| Timeline |
| GoPro Inc |
| Universal Electronics |
GoPro and Universal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoPro and Universal Electronics
The main advantage of trading using opposite GoPro and Universal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro position performs unexpectedly, Universal Electronics 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 Universal Electronics will offset losses from the drop in Universal Electronics' long position.| GoPro vs. Sony Group Corp | GoPro vs. LG Display Co | GoPro vs. Universal Electronics | GoPro vs. VOXX International |
| Universal Electronics vs. LG Display Co | Universal Electronics vs. Zepp Health Corp | Universal Electronics vs. Sonos Inc | Universal Electronics vs. VOXX International |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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