Correlation Between On Holding and GoPro
Can any of the company-specific risk be diversified away by investing in both On Holding 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 On Holding and GoPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between On Holding and GoPro Inc, you can compare the effects of market volatilities on On Holding 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 On Holding with a short position of GoPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of On Holding and GoPro.
Diversification Opportunities for On Holding and GoPro
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ONON and GoPro is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding On Holding and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc and On Holding 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 On Holding 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 On Holding i.e., On Holding and GoPro go up and down completely randomly.
Pair Corralation between On Holding and GoPro
Given the investment horizon of 90 days On Holding is expected to generate 1.05 times more return on investment than GoPro. However, On Holding is 1.05 times more volatile than GoPro Inc. It trades about 0.34 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.29 per unit of risk. If you would invest 5,537 in On Holding on November 3, 2024 and sell it today you would earn a total of 825.00 from holding On Holding or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
On Holding vs. GoPro Inc
Performance |
| Timeline |
| On Holding |
| GoPro Inc |
On Holding and GoPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with On Holding and GoPro
The main advantage of trading using opposite On Holding and GoPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if On Holding 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.| On Holding vs. Crocs Inc | On Holding vs. Skechers USA | On Holding vs. Nike Inc | On Holding vs. Designer Brands |
| GoPro vs. Sony Group Corp | GoPro vs. LG Display Co | GoPro vs. Universal Electronics | GoPro 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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