Correlation Between Teleflex Incorporated and BRP

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

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

Diversification Opportunities for Teleflex Incorporated and BRP

0.79

Correlation Coefficient

Teleflex Incorporated  BRP

Poor diversification

The 3 months correlation between Teleflex and BRP is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated i.e., Teleflex Incorporated and BRP go up and down completely randomly.

Pair Corralation between Teleflex Incorporated and BRP

Considering the 90-day investment horizon Teleflex Incorporated is expected to under-perform the BRP. But the stock apears to be less risky and, when comparing its historical volatility, Teleflex Incorporated is 1.2 times less risky than BRP. The stock trades about -0.03 of its potential returns per unit of risk. The BRP Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  7,570  in BRP Inc on September 25, 2024 and sell it today you would lose (2,311) from holding BRP Inc or give up 30.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Teleflex Incorporated  vs.  BRP Inc

Teleflex Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleflex Incorporated 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 weak 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.

Pair Trading with Teleflex Incorporated and BRP

The main advantage of trading using opposite Teleflex Incorporated and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teleflex Incorporated 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 Teleflex Incorporated 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.