Correlation Between BRP and Valmont Industries

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

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

Diversification Opportunities for BRP and Valmont Industries

-0.78

Correlation Coefficient

BRP  Valmont Industries

Pay attention - limited upside

The 3 months correlation between BRP and Valmont is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Valmont Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valmont Industries 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 Valmont Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valmont Industries has no effect on the direction of BRP i.e., BRP and Valmont Industries go up and down completely randomly.

Pair Corralation between BRP and Valmont Industries

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Valmont Industries. In addition to that, BRP is 1.07 times more volatile than Valmont Industries. It trades about -0.04 of its total potential returns per unit of risk. Valmont Industries is currently generating about 0.01 per unit of volatility. If you would invest  31,786  in Valmont Industries on October 6, 2024 and sell it today you would lose (805.00) from holding Valmont Industries or give up 2.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BRP Inc  vs.  Valmont Industries

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.

Valmont Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Valmont Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal primary indicators, Valmont Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BRP and Valmont Industries

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

The idea behind BRP Inc and Valmont Industries 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.