Correlation Between BRP and AETNA

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

By analyzing existing cross correlation between BRP Inc and AETNA INC 7625, you can compare the effects of market volatilities on BRP and AETNA 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 AETNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and AETNA.

Diversification Opportunities for BRP and AETNA

0.17

Correlation Coefficient

BRP  AETNA

Average diversification

The 3 months correlation between BRP and AETNA is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and AETNA INC 7625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AETNA INC 7625 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 AETNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AETNA INC 7625 has no effect on the direction of BRP i.e., BRP and AETNA go up and down completely randomly.

Pair Corralation between BRP and AETNA

Given the investment horizon of 90 days BRP is expected to generate 1.18 times less return on investment than AETNA. In addition to that, BRP is 1.46 times more volatile than AETNA INC 7625. It trades about 0.05 of its total potential returns per unit of risk. AETNA INC 7625 is currently generating about 0.09 per unit of volatility. If you would invest  10,431  in AETNA INC 7625 on October 25, 2024 and sell it today you would earn a total of  515.00  from holding AETNA INC 7625 or generate 4.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.0%
Values	Daily Returns

BRP Inc  vs.  AETNA INC 7625

BRP Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BRP Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, BRP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AETNA INC 7625

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AETNA INC 7625 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, AETNA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BRP and AETNA

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

The idea behind BRP Inc and AETNA INC 7625 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.