Correlation Between 05329WAS1 and BRP

Can any of the company-specific risk be diversified away by investing in both 05329WAS1 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 05329WAS1 and BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AN 24 01 AUG 31 and BRP Inc, you can compare the effects of market volatilities on 05329WAS1 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 05329WAS1 with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of 05329WAS1 and BRP.

Diversification Opportunities for 05329WAS1 and BRP

0.25

Correlation Coefficient

05329WAS1  BRP

Modest diversification

The 3 months correlation between 05329WAS1 and BRP is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AN 24 01 AUG 31 and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and 05329WAS1 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 AN 24 01 AUG 31 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 05329WAS1 i.e., 05329WAS1 and BRP go up and down completely randomly.

Pair Corralation between 05329WAS1 and BRP

Assuming the 90 days trading horizon AN 24 01 AUG 31 is expected to generate 0.37 times more return on investment than BRP. However, AN 24 01 AUG 31 is 2.74 times less risky than BRP. It trades about 0.04 of its potential returns per unit of risk. BRP Inc is currently generating about -0.02 per unit of risk. If you would invest  7,348  in AN 24 01 AUG 31 on September 23, 2024 and sell it today you would earn a total of  1,082  from holding AN 24 01 AUG 31 or generate 14.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.56%
Values	Daily Returns

AN 24 01 AUG 31  vs.  BRP Inc

05329WAS1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AN 24 01 AUG 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 05329WAS1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 05329WAS1 and BRP

The main advantage of trading using opposite 05329WAS1 and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 05329WAS1 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 AN 24 01 AUG 31 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.