Correlation Between BRP and Aptiv PLC

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

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

Diversification Opportunities for BRP and Aptiv PLC

-0.6

Correlation Coefficient

BRP  Aptiv PLC

Excellent diversification

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

Pair Corralation between BRP and Aptiv PLC

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Aptiv PLC. In addition to that, BRP is 1.9 times more volatile than Aptiv PLC. It trades about -0.14 of its total potential returns per unit of risk. Aptiv PLC is currently generating about 0.1 per unit of volatility. If you would invest  6,034  in Aptiv PLC on December 27, 2024 and sell it today you would earn a total of  546.00  from holding Aptiv PLC or generate 9.05% return on investment over 90 days.

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

BRP Inc  vs.  Aptiv PLC

BRP Inc

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aptiv PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptiv PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Aptiv PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BRP and Aptiv PLC

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

The idea behind BRP Inc and Aptiv PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.