Correlation Between BRP and Signature Bank

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both BRP and Signature Bank 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 Signature Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Signature Bank, you can compare the effects of market volatilities on BRP and Signature Bank 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 Signature Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Signature Bank.

Diversification Opportunities for BRP and Signature Bank

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between BRP and Signature is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Signature Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signature Bank 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 Signature Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signature Bank has no effect on the direction of BRP i.e., BRP and Signature Bank go up and down completely randomly.

Pair Corralation between BRP and Signature Bank

If you would invest  5,084  in BRP Inc on September 24, 2024 and sell it today you would earn a total of  175.00  from holding BRP Inc or generate 3.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy5.0%
ValuesDaily Returns

BRP Inc  vs.  Signature Bank

 Performance 
       Timeline  
BRP Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Signature Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Signature Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Signature Bank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

BRP and Signature Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BRP and Signature Bank

The main advantage of trading using opposite BRP and Signature Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Signature Bank 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 Signature Bank will offset losses from the drop in Signature Bank's long position.
The idea behind BRP Inc and Signature Bank 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

Other Complementary Tools

Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios