Correlation Between BRP and Liberty Media

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

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

Diversification Opportunities for BRP and Liberty Media

-0.46

Correlation Coefficient

BRP  Liberty Media

Very good diversification

The 3 months correlation between BRP and Liberty is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of BRP i.e., BRP and Liberty Media go up and down completely randomly.

Pair Corralation between BRP and Liberty Media

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Liberty Media. In addition to that, BRP is 1.18 times more volatile than Liberty Media. It trades about -0.04 of its total potential returns per unit of risk. Liberty Media is currently generating about 0.21 per unit of volatility. If you would invest  5,546  in Liberty Media on October 21, 2024 and sell it today you would earn a total of  1,483  from holding Liberty Media or generate 26.74% return on investment over 90 days.

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

BRP Inc  vs.  Liberty Media

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 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.

Liberty Media

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Liberty Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRP and Liberty Media

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

The idea behind BRP Inc and Liberty Media 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.