Correlation Between Ubisoft Entertainment and BRP

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

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

Diversification Opportunities for Ubisoft Entertainment and BRP

0.32

Correlation Coefficient

Ubisoft Entertainment  BRP

Weak diversification

The 3 months correlation between Ubisoft and BRP is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Ubisoft Entertainment 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 Ubisoft Entertainment 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 Ubisoft Entertainment i.e., Ubisoft Entertainment and BRP go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and BRP

Assuming the 90 days horizon Ubisoft Entertainment is expected to generate 1.48 times more return on investment than BRP. However, Ubisoft Entertainment is 1.48 times more volatile than BRP Inc. It trades about -0.02 of its potential returns per unit of risk. BRP Inc is currently generating about -0.06 per unit of risk. If you would invest  1,441  in Ubisoft Entertainment on October 10, 2024 and sell it today you would lose (107.00) from holding Ubisoft Entertainment or give up 7.43% of portfolio value over 90 days.

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

Ubisoft Entertainment  vs.  BRP Inc

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubisoft Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ubisoft Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Ubisoft Entertainment and BRP

The main advantage of trading using opposite Ubisoft Entertainment and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubisoft Entertainment 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 Ubisoft Entertainment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.