Correlation Between Village Super and BRP

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

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

Diversification Opportunities for Village Super and BRP

-0.4

Correlation Coefficient

Village Super  BRP

Very good diversification

The 3 months correlation between Village and BRP is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Village Super 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 Village Super Market 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 Village Super i.e., Village Super and BRP go up and down completely randomly.

Pair Corralation between Village Super and BRP

Assuming the 90 days horizon Village Super Market is expected to generate 0.9 times more return on investment than BRP. However, Village Super Market is 1.12 times less risky than BRP. It trades about 0.06 of its potential returns per unit of risk. BRP Inc is currently generating about -0.03 per unit of risk. If you would invest  2,437  in Village Super Market on October 8, 2024 and sell it today you would earn a total of  703.00  from holding Village Super Market or generate 28.85% return on investment over 90 days.

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

Village Super Market  vs.  BRP Inc

Village Super Market

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Village Super Market are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Village Super is not utilizing all of its potentials. The current 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 Village Super and BRP

The main advantage of trading using opposite Village Super and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Super 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 Village Super Market 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.