Correlation Between BRP and XIAO I

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

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

Diversification Opportunities for BRP and XIAO I

-0.23

Correlation Coefficient

BRP  XIAO I

Very good diversification

The 3 months correlation between BRP and XIAO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and XIAO I American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAO I American and BRP 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 BRP Inc are associated (or correlated) with XIAO I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAO I American has no effect on the direction of BRP i.e., BRP and XIAO I go up and down completely randomly.

Pair Corralation between BRP and XIAO I

Given the investment horizon of 90 days BRP Inc is expected to under-perform the XIAO I. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 3.58 times less risky than XIAO I. The stock trades about -0.09 of its potential returns per unit of risk. The XIAO I American is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  450.00  in XIAO I American on September 24, 2024 and sell it today you would earn a total of  39.00  from holding XIAO I American or generate 8.67% return on investment over 90 days.

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

BRP Inc  vs.  XIAO I American

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 uncertain 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.

XIAO I American

Risk-Adjusted Performance

4 of 100

OK

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

Pair Trading with BRP and XIAO I

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

The idea behind BRP Inc and XIAO I American 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.