Correlation Between BRP and Fortune Rise

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

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

Diversification Opportunities for BRP and Fortune Rise

-0.92

Correlation Coefficient

BRP  Fortune Rise

Pay attention - limited upside

The 3 months correlation between BRP and Fortune is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Fortune Rise Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Rise Acquisition 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 Fortune Rise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Rise Acquisition has no effect on the direction of BRP i.e., BRP and Fortune Rise go up and down completely randomly.

Pair Corralation between BRP and Fortune Rise

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Fortune Rise. In addition to that, BRP is 5.1 times more volatile than Fortune Rise Acquisition. It trades about -0.21 of its total potential returns per unit of risk. Fortune Rise Acquisition is currently generating about 0.17 per unit of volatility. If you would invest  1,126  in Fortune Rise Acquisition on September 4, 2024 and sell it today you would earn a total of  43.00  from holding Fortune Rise Acquisition or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	78.13%
Values	Daily Returns

BRP Inc  vs.  Fortune Rise Acquisition

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

Fortune Rise Acquisition

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Fortune Rise Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fortune Rise is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BRP and Fortune Rise

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

The idea behind BRP Inc and Fortune Rise Acquisition 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.