Correlation Between BRP and KINDER

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

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

Diversification Opportunities for BRP and KINDER

-0.04

Correlation Coefficient

BRP  KINDER

Good diversification

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

Pair Corralation between BRP and KINDER

Given the investment horizon of 90 days BRP Inc is expected to under-perform the KINDER. In addition to that, BRP is 11.33 times more volatile than KINDER MORGAN INC. It trades about -0.02 of its total potential returns per unit of risk. KINDER MORGAN INC is currently generating about 0.0 per unit of volatility. If you would invest  9,908  in KINDER MORGAN INC on October 10, 2024 and sell it today you would lose (5.00) from holding KINDER MORGAN INC or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

BRP Inc  vs.  KINDER MORGAN INC

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 latest weak 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.

KINDER MORGAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER 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 KINDER

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

The idea behind BRP Inc and KINDER MORGAN INC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.