Correlation Between BRP and Fitell Ordinary

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

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

Diversification Opportunities for BRP and Fitell Ordinary

-0.81

Correlation Coefficient

BRP  Fitell Ordinary

Pay attention - limited upside

The 3 months correlation between BRP and Fitell is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Fitell Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fitell Ordinary 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 Fitell Ordinary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fitell Ordinary has no effect on the direction of BRP i.e., BRP and Fitell Ordinary go up and down completely randomly.

Pair Corralation between BRP and Fitell Ordinary

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Fitell Ordinary. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 4.78 times less risky than Fitell Ordinary. The stock trades about -0.26 of its potential returns per unit of risk. The Fitell Ordinary is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,491  in Fitell Ordinary on August 30, 2024 and sell it today you would earn a total of  1,209  from holding Fitell Ordinary or generate 81.09% return on investment over 90 days.

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

BRP Inc  vs.  Fitell Ordinary

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fitell Ordinary

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fitell Ordinary are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Fitell Ordinary disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRP and Fitell Ordinary

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

The idea behind BRP Inc and Fitell Ordinary 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.