Correlation Between BRP and Charles Colvard

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

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

Diversification Opportunities for BRP and Charles Colvard

0.84

Correlation Coefficient

BRP  Charles Colvard

Very poor diversification

The 3 months correlation between BRP and Charles is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Charles Colvard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Colvard 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 Charles Colvard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Colvard has no effect on the direction of BRP i.e., BRP and Charles Colvard go up and down completely randomly.

Pair Corralation between BRP and Charles Colvard

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Charles Colvard. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 1.35 times less risky than Charles Colvard. The stock trades about -0.18 of its potential returns per unit of risk. The Charles Colvard is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Charles Colvard on December 28, 2024 and sell it today you would lose (36.00) from holding Charles Colvard or give up 26.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

BRP Inc  vs.  Charles Colvard

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.

Charles Colvard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charles Colvard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with BRP and Charles Colvard

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

The idea behind BRP Inc and Charles Colvard 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.