Correlation Between Brinks and Exponent

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

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

Diversification Opportunities for Brinks and Exponent

0.84

Correlation Coefficient

Brinks  Exponent

Very poor diversification

The 3 months correlation between Brinks and Exponent is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Brinks Company and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and Brinks 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 Brinks Company are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Brinks i.e., Brinks and Exponent go up and down completely randomly.

Pair Corralation between Brinks and Exponent

Considering the 90-day investment horizon Brinks Company is expected to under-perform the Exponent. But the stock apears to be less risky and, when comparing its historical volatility, Brinks Company is 1.25 times less risky than Exponent. The stock trades about -0.09 of its potential returns per unit of risk. The Exponent is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  10,606  in Exponent on September 1, 2024 and sell it today you would lose (735.00) from holding Exponent or give up 6.93% of portfolio value over 90 days.

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

Brinks Company  vs.  Exponent

Brinks Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brinks Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Exponent is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brinks and Exponent

The main advantage of trading using opposite Brinks and Exponent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinks position performs unexpectedly, Exponent 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 Exponent will offset losses from the drop in Exponent's long position.

The idea behind Brinks Company and Exponent 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.