Correlation Between GoPro and Turtle Beach

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Can any of the company-specific risk be diversified away by investing in both GoPro and Turtle Beach 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 Turtle Beach into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoPro Inc and Turtle Beach Corp, you can compare the effects of market volatilities on GoPro and Turtle Beach 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 Turtle Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoPro and Turtle Beach.

Diversification Opportunities for GoPro and Turtle Beach

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between GoPro and Turtle is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Turtle Beach Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turtle Beach Corp 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 Turtle Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turtle Beach Corp has no effect on the direction of GoPro i.e., GoPro and Turtle Beach go up and down completely randomly.

Pair Corralation between GoPro and Turtle Beach

Given the investment horizon of 90 days GoPro Inc is expected to under-perform the Turtle Beach. But the stock apears to be less risky and, when comparing its historical volatility, GoPro Inc is 2.27 times less risky than Turtle Beach. The stock trades about -0.01 of its potential returns per unit of risk. The Turtle Beach Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,091  in Turtle Beach Corp on December 29, 2023 and sell it today you would earn a total of  633.00  from holding Turtle Beach Corp or generate 58.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GoPro Inc  vs.  Turtle Beach Corp

 Performance 
       Timeline  
GoPro Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
Turtle Beach Corp 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Turtle Beach Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Turtle Beach reported solid returns over the last few months and may actually be approaching a breakup point.

GoPro and Turtle Beach Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GoPro and Turtle Beach

The main advantage of trading using opposite GoPro and Turtle Beach positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro position performs unexpectedly, Turtle Beach 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 Turtle Beach will offset losses from the drop in Turtle Beach's long position.
The idea behind GoPro Inc and Turtle Beach Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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