Correlation Between BRP and Green Planet

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

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

Diversification Opportunities for BRP and Green Planet

-0.04

Correlation Coefficient

BRP  Green Planet

Good diversification

The 3 months correlation between BRP and Green is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Green Planet Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Planet Bio 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 Green Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Planet Bio has no effect on the direction of BRP i.e., BRP and Green Planet go up and down completely randomly.

Pair Corralation between BRP and Green Planet

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Green Planet. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 40.72 times less risky than Green Planet. The stock trades about -0.03 of its potential returns per unit of risk. The Green Planet Bio is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Green Planet Bio on October 26, 2024 and sell it today you would lose (196.00) from holding Green Planet Bio or give up 78.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BRP Inc  vs.  Green Planet Bio

BRP Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BRP Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BRP is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Green Planet Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Planet Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Green Planet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BRP and Green Planet

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

The idea behind BRP Inc and Green Planet Bio 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.