Correlation Between GoPro and Hamilton Beach

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Can any of the company-specific risk be diversified away by investing in both GoPro and Hamilton 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 Hamilton 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 Hamilton Beach Brands, you can compare the effects of market volatilities on GoPro and Hamilton 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 Hamilton Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoPro and Hamilton Beach.

Diversification Opportunities for GoPro and Hamilton Beach

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between GoPro and Hamilton is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Hamilton Beach Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Beach Brands 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 Hamilton Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Beach Brands has no effect on the direction of GoPro i.e., GoPro and Hamilton Beach go up and down completely randomly.

Pair Corralation between GoPro and Hamilton Beach

Given the investment horizon of 90 days GoPro Inc is expected to under-perform the Hamilton Beach. But the stock apears to be less risky and, when comparing its historical volatility, GoPro Inc is 1.45 times less risky than Hamilton Beach. The stock trades about -0.01 of its potential returns per unit of risk. The Hamilton Beach Brands is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,926  in Hamilton Beach Brands on December 29, 2023 and sell it today you would earn a total of  532.00  from holding Hamilton Beach Brands or generate 27.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GoPro Inc  vs.  Hamilton Beach Brands

 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.
Hamilton Beach Brands 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Beach Brands are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Hamilton Beach sustained solid returns over the last few months and may actually be approaching a breakup point.

GoPro and Hamilton Beach Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GoPro and Hamilton Beach

The main advantage of trading using opposite GoPro and Hamilton Beach positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro position performs unexpectedly, Hamilton 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 Hamilton Beach will offset losses from the drop in Hamilton Beach's long position.
The idea behind GoPro Inc and Hamilton Beach Brands 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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