Correlation Between Chart Industries and BRP

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

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

Diversification Opportunities for Chart Industries and BRP

0.5

Correlation Coefficient

Chart Industries  BRP

Very weak diversification

The 3 months correlation between Chart and BRP is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Chart Industries 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 Chart Industries 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 Chart Industries i.e., Chart Industries and BRP go up and down completely randomly.

Pair Corralation between Chart Industries and BRP

Assuming the 90 days trading horizon Chart Industries is expected to generate 1.31 times more return on investment than BRP. However, Chart Industries is 1.31 times more volatile than BRP Inc. It trades about 0.05 of its potential returns per unit of risk. BRP Inc is currently generating about -0.03 per unit of risk. If you would invest  5,128  in Chart Industries on October 26, 2024 and sell it today you would earn a total of  2,890  from holding Chart Industries or generate 56.36% return on investment over 90 days.

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

Chart Industries  vs.  BRP Inc

Chart Industries

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Chart Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

BRP Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BRP Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BRP is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Chart Industries and BRP

The main advantage of trading using opposite Chart Industries and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chart Industries 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 Chart Industries 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.