Correlation Between Xponential Fitness and BRP

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

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

Diversification Opportunities for Xponential Fitness and BRP

-0.61

Correlation Coefficient

Xponential Fitness  BRP

Excellent diversification

The 3 months correlation between Xponential and BRP is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and BRP go up and down completely randomly.

Pair Corralation between Xponential Fitness and BRP

Given the investment horizon of 90 days Xponential Fitness is expected to generate 3.52 times less return on investment than BRP. In addition to that, Xponential Fitness is 1.28 times more volatile than BRP Inc. It trades about 0.03 of its total potential returns per unit of risk. BRP Inc is currently generating about 0.14 per unit of volatility. If you would invest  4,809  in BRP Inc on September 16, 2024 and sell it today you would earn a total of  362.00  from holding BRP Inc or generate 7.53% return on investment over 90 days.

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

Xponential Fitness  vs.  BRP Inc

Xponential Fitness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Xponential Fitness and BRP

The main advantage of trading using opposite Xponential Fitness and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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 Xponential Fitness 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.