Correlation Between BRP Old and Selectquote

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

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

Diversification Opportunities for BRP Old and Selectquote

0.4

Correlation Coefficient

BRP Old  Selectquote

Very weak diversification

The 3 months correlation between BRP and Selectquote is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BRP Old and Selectquote in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selectquote and BRP Old 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 BRP Old are associated (or correlated) with Selectquote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selectquote has no effect on the direction of BRP Old i.e., BRP Old and Selectquote go up and down completely randomly.

Pair Corralation between BRP Old and Selectquote

If you would invest  292.00  in Selectquote on October 8, 2024 and sell it today you would earn a total of  122.00  from holding Selectquote or generate 41.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.26%
Values	Daily Returns

BRP Old  vs.  Selectquote

BRP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BRP Old is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Selectquote

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Selectquote are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Selectquote unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRP Old and Selectquote

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

The idea behind BRP Old and Selectquote 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.