Correlation Between GoPro and Costco Wholesale

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

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

Diversification Opportunities for GoPro and Costco Wholesale

-0.49

Correlation Coefficient

GoPro  Costco Wholesale

Very good diversification

The 3 months correlation between GoPro and Costco is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of GoPro i.e., GoPro and Costco Wholesale go up and down completely randomly.

Pair Corralation between GoPro and Costco Wholesale

Assuming the 90 days trading horizon GoPro Inc is expected to generate 5.63 times more return on investment than Costco Wholesale. However, GoPro is 5.63 times more volatile than Costco Wholesale. It trades about 0.16 of its potential returns per unit of risk. Costco Wholesale is currently generating about -0.02 per unit of risk. If you would invest  352.00  in GoPro Inc on April 24, 2025 and sell it today you would earn a total of  408.00  from holding GoPro Inc or generate 115.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

GoPro Inc  vs.  Costco Wholesale

GoPro Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GoPro Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GoPro sustained solid returns over the last few months and may actually be approaching a breakup point.

Costco Wholesale

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costco Wholesale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Costco Wholesale is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GoPro and Costco Wholesale

The main advantage of trading using opposite GoPro and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoPro position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.

The idea behind GoPro Inc and Costco Wholesale 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 Stocks Directory module to find actively traded stocks across global markets.