Correlation Between ZOOZ Power and BRP

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

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

Diversification Opportunities for ZOOZ Power and BRP

-0.71

Correlation Coefficient

ZOOZ Power  BRP

Pay attention - limited upside

The 3 months correlation between ZOOZ and BRP is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ZOOZ Power Ltd and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and ZOOZ Power 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 ZOOZ Power Ltd 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 ZOOZ Power i.e., ZOOZ Power and BRP go up and down completely randomly.

Pair Corralation between ZOOZ Power and BRP

Given the investment horizon of 90 days ZOOZ Power Ltd is expected to under-perform the BRP. In addition to that, ZOOZ Power is 2.18 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 -0.03 per unit of volatility. If you would invest  7,777  in BRP Inc on September 29, 2024 and sell it today you would lose (2,743) from holding BRP Inc or give up 35.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	37.3%
Values	Daily Returns

ZOOZ Power Ltd  vs.  BRP Inc

ZOOZ Power

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZOOZ Power Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, ZOOZ Power showed 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 uncertain 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 ZOOZ Power and BRP

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