Correlation Between BRP and Brunswick

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

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

Diversification Opportunities for BRP and Brunswick

-0.26

Correlation Coefficient

BRP  Brunswick

Very good diversification

The 3 months correlation between BRP and Brunswick is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of BRP i.e., BRP and Brunswick go up and down completely randomly.

Pair Corralation between BRP and Brunswick

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Brunswick. In addition to that, BRP is 1.13 times more volatile than Brunswick. It trades about -0.23 of its total potential returns per unit of risk. Brunswick is currently generating about 0.05 per unit of volatility. If you would invest  7,678  in Brunswick on September 2, 2024 and sell it today you would earn a total of  373.00  from holding Brunswick or generate 4.86% 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.  Brunswick

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 inconsistent 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.

Brunswick

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Brunswick is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BRP and Brunswick

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

The idea behind BRP Inc and Brunswick 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.