Correlation Between BRP and KEYCORP

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

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

Diversification Opportunities for BRP and KEYCORP

0.3

Correlation Coefficient

BRP  KEYCORP

Weak diversification

The 3 months correlation between BRP and KEYCORP is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and KEYCORP MEDIUM TERM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYCORP MEDIUM TERM 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 KEYCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYCORP MEDIUM TERM has no effect on the direction of BRP i.e., BRP and KEYCORP go up and down completely randomly.

Pair Corralation between BRP and KEYCORP

Given the investment horizon of 90 days BRP Inc is expected to generate 5.5 times more return on investment than KEYCORP. However, BRP is 5.5 times more volatile than KEYCORP MEDIUM TERM. It trades about 0.12 of its potential returns per unit of risk. KEYCORP MEDIUM TERM is currently generating about -0.19 per unit of risk. If you would invest  4,852  in BRP Inc on October 6, 2024 and sell it today you would earn a total of  257.00  from holding BRP Inc or generate 5.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

BRP Inc  vs.  KEYCORP MEDIUM TERM

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

KEYCORP MEDIUM TERM

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BRP and KEYCORP

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

The idea behind BRP Inc and KEYCORP MEDIUM TERM 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.