Correlation Between Global Medical and GoPro
Can any of the company-specific risk be diversified away by investing in both Global Medical 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 Global Medical and GoPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Medical REIT and GoPro Inc, you can compare the effects of market volatilities on Global Medical 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 Global Medical with a short position of GoPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and GoPro.
Diversification Opportunities for Global Medical and GoPro
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and GoPro is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc and Global Medical 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 Global Medical REIT 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 Global Medical i.e., Global Medical and GoPro go up and down completely randomly.
Pair Corralation between Global Medical and GoPro
Given the investment horizon of 90 days Global Medical REIT is expected to generate 0.66 times more return on investment than GoPro. However, Global Medical REIT is 1.51 times less risky than GoPro. It trades about -0.02 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.07 per unit of risk. If you would invest 1,097 in Global Medical REIT on February 3, 2024 and sell it today you would lose (264.00) from holding Global Medical REIT or give up 24.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Global Medical REIT vs. GoPro Inc
Performance |
Timeline |
Global Medical REIT |
GoPro Inc |
Global Medical and GoPro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Medical and GoPro
The main advantage of trading using opposite Global Medical and GoPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical 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.Global Medical vs. Healthpeak Properties | Global Medical vs. Sabra Healthcare REIT | Global Medical vs. Community Healthcare Trust | Global Medical vs. Universal Health Realty |
GoPro vs. Sony Group Corp | GoPro vs. LG Display Co | GoPro vs. Vizio Holding Corp | GoPro vs. Universal Electronics |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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