Correlation Between Fortrea Holdings and BRP

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

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

Diversification Opportunities for Fortrea Holdings and BRP

-0.31

Correlation Coefficient

Fortrea Holdings  BRP

Very good diversification

The 3 months correlation between Fortrea and BRP is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fortrea Holdings and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Fortrea Holdings 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 Fortrea Holdings 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 Fortrea Holdings i.e., Fortrea Holdings and BRP go up and down completely randomly.

Pair Corralation between Fortrea Holdings and BRP

Given the investment horizon of 90 days Fortrea Holdings is expected to under-perform the BRP. In addition to that, Fortrea Holdings is 1.75 times more volatile than BRP Inc. It trades about -0.18 of its total potential returns per unit of risk. BRP Inc is currently generating about -0.04 per unit of volatility. If you would invest  5,223  in BRP Inc on October 11, 2024 and sell it today you would lose (114.00) from holding BRP Inc or give up 2.18% of portfolio value over 90 days.

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

Fortrea Holdings  vs.  BRP Inc

Fortrea Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortrea Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fortrea Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Fortrea Holdings and BRP

The main advantage of trading using opposite Fortrea Holdings and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortrea Holdings 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 Fortrea Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..