Correlation Between BRP and Greenfire Resources

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

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

Diversification Opportunities for BRP and Greenfire Resources

0.48

Correlation Coefficient

BRP  Greenfire Resources

Very weak diversification

The 3 months correlation between BRP and Greenfire is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Greenfire Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenfire Resources 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 Greenfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenfire Resources has no effect on the direction of BRP i.e., BRP and Greenfire Resources go up and down completely randomly.

Pair Corralation between BRP and Greenfire Resources

Given the investment horizon of 90 days BRP Inc is expected to generate 1.71 times more return on investment than Greenfire Resources. However, BRP is 1.71 times more volatile than Greenfire Resources. It trades about 0.01 of its potential returns per unit of risk. Greenfire Resources is currently generating about -0.57 per unit of risk. If you would invest  5,084  in BRP Inc on September 24, 2024 and sell it today you would lose (6.00) from holding BRP Inc or give up 0.12% of portfolio value over 90 days.

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

BRP Inc  vs.  Greenfire Resources

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 uncertain 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.

Greenfire Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BRP and Greenfire Resources

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

The idea behind BRP Inc and Greenfire Resources 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.