Correlation Between BRP and PLBIIJ

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

By analyzing existing cross correlation between BRP Inc and PLBIIJ 425 05 MAY 25, you can compare the effects of market volatilities on BRP and PLBIIJ 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 PLBIIJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and PLBIIJ.

Diversification Opportunities for BRP and PLBIIJ

-0.56

Correlation Coefficient

BRP  PLBIIJ

Excellent diversification

The 3 months correlation between BRP and PLBIIJ is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and PLBIIJ 425 05 MAY 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLBIIJ 425 05 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 PLBIIJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLBIIJ 425 05 has no effect on the direction of BRP i.e., BRP and PLBIIJ go up and down completely randomly.

Pair Corralation between BRP and PLBIIJ

Given the investment horizon of 90 days BRP Inc is expected to under-perform the PLBIIJ. In addition to that, BRP is 6.12 times more volatile than PLBIIJ 425 05 MAY 25. It trades about -0.03 of its total potential returns per unit of risk. PLBIIJ 425 05 MAY 25 is currently generating about -0.03 per unit of volatility. If you would invest  9,882  in PLBIIJ 425 05 MAY 25 on October 12, 2024 and sell it today you would lose (157.00) from holding PLBIIJ 425 05 MAY 25 or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.91%
Values	Daily Returns

BRP Inc  vs.  PLBIIJ 425 05 MAY 25

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 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.

PLBIIJ 425 05

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLBIIJ 425 05 MAY 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PLBIIJ 425 05 MAY 25 investors.

Pair Trading with BRP and PLBIIJ

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

The idea behind BRP Inc and PLBIIJ 425 05 MAY 25 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.