Correlation Between Caldas Gold and BRP

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

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

Diversification Opportunities for Caldas Gold and BRP

0.0

Correlation Coefficient

Caldas Gold  BRP

Pay attention - limited upside

The 3 months correlation between Caldas and BRP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caldas Gold and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Caldas Gold 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 Caldas Gold are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Caldas Gold i.e., Caldas Gold and BRP go up and down completely randomly.

Pair Corralation between Caldas Gold and BRP

Assuming the 90 days horizon Caldas Gold is expected to under-perform the BRP. In addition to that, Caldas Gold is 7.16 times more volatile than BRP Inc. It trades about -0.39 of its total potential returns per unit of risk. BRP Inc is currently generating about -0.06 per unit of volatility. If you would invest  6,868  in BRP Inc on October 9, 2024 and sell it today you would lose (1,619) from holding BRP Inc or give up 23.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	3.64%
Values	Daily Returns

Caldas Gold  vs.  BRP Inc

Caldas Gold

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Caldas Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Caldas Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Caldas Gold and BRP

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

The idea behind Caldas Gold and BRP 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.