Correlation Between EZGO Technologies and BRP

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

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

Diversification Opportunities for EZGO Technologies and BRP

0.72

Correlation Coefficient

EZGO Technologies  BRP

Poor diversification

The 3 months correlation between EZGO and BRP is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and EZGO Technologies 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 EZGO Technologies are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of EZGO Technologies i.e., EZGO Technologies and BRP go up and down completely randomly.

Pair Corralation between EZGO Technologies and BRP

Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the BRP. In addition to that, EZGO Technologies is 1.8 times more volatile than BRP Inc. It trades about -0.22 of its total potential returns per unit of risk. BRP Inc is currently generating about -0.14 per unit of volatility. If you would invest  5,019  in BRP Inc on December 27, 2024 and sell it today you would lose (1,196) from holding BRP Inc or give up 23.83% of portfolio value over 90 days.

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

EZGO Technologies  vs.  BRP Inc

EZGO Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days EZGO Technologies 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BRP Inc

Risk-Adjusted Performance

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with EZGO Technologies and BRP

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

The idea behind EZGO Technologies and BRP 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.