Correlation Between Apple and GoPro

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

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

Diversification Opportunities for Apple and GoPro

-0.43

Correlation Coefficient

Apple  GoPro

Very good diversification

The 3 months correlation between Apple and GoPro is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc and Apple 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 Apple Inc 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 Apple i.e., Apple and GoPro go up and down completely randomly.

Pair Corralation between Apple and GoPro

Given the investment horizon of 90 days Apple Inc is expected to generate 0.18 times more return on investment than GoPro. However, Apple Inc is 5.62 times less risky than GoPro. It trades about 0.86 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.02 per unit of risk. If you would invest  22,802  in Apple Inc on September 19, 2024 and sell it today you would earn a total of  2,546  from holding Apple Inc or generate 11.17% return on investment over 90 days.

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

Apple Inc  vs.  GoPro Inc

Apple Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GoPro Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoPro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Apple and GoPro

The main advantage of trading using opposite Apple and GoPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.

The idea behind Apple Inc and GoPro Inc 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.