Correlation Between BRP and Alignment Healthcare

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

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

Diversification Opportunities for BRP and Alignment Healthcare

-0.47

Correlation Coefficient

BRP  Alignment Healthcare

Very good diversification

The 3 months correlation between BRP and Alignment is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC and BRP 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 Inc are associated (or correlated) with Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of BRP i.e., BRP and Alignment Healthcare go up and down completely randomly.

Pair Corralation between BRP and Alignment Healthcare

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Alignment Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 1.3 times less risky than Alignment Healthcare. The stock trades about -0.03 of its potential returns per unit of risk. The Alignment Healthcare LLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,143  in Alignment Healthcare LLC on October 9, 2024 and sell it today you would lose (11.00) from holding Alignment Healthcare LLC or give up 0.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BRP Inc  vs.  Alignment Healthcare LLC

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.

Alignment Healthcare LLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Alignment Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BRP and Alignment Healthcare

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

The idea behind BRP Inc and Alignment Healthcare LLC 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 Global Correlations module to find global opportunities by holding instruments from different markets.