Correlation Between Red Rock and GoPro

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

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

Diversification Opportunities for Red Rock and GoPro

0.65

Correlation Coefficient

Red Rock  GoPro

Poor diversification

The 3 months correlation between Red and GoPro is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Red Rock Resorts and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc and Red Rock 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 Red Rock Resorts 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 Red Rock i.e., Red Rock and GoPro go up and down completely randomly.

Pair Corralation between Red Rock and GoPro

Considering the 90-day investment horizon Red Rock is expected to generate 2.48 times less return on investment than GoPro. But when comparing it to its historical volatility, Red Rock Resorts is 3.28 times less risky than GoPro. It trades about 0.27 of its potential returns per unit of risk. GoPro Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  59.00  in GoPro Inc on May 3, 2025 and sell it today you would earn a total of  70.00  from holding GoPro Inc or generate 118.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Red Rock Resorts  vs.  GoPro Inc

Red Rock Resorts

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Red Rock Resorts are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Red Rock reported solid returns over the last few months and may actually be approaching a breakup point.

GoPro Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GoPro Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GoPro displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Red Rock and GoPro

The main advantage of trading using opposite Red Rock and GoPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Rock 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 Red Rock Resorts 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..