Correlation Between BRP and Thor Industries
Can any of the company-specific risk be diversified away by investing in both BRP and Thor Industries 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 Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Thor Industries, you can compare the effects of market volatilities on BRP and Thor Industries 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 Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Thor Industries.
Diversification Opportunities for BRP and Thor Industries
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BRP and Thor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of BRP i.e., BRP and Thor Industries go up and down completely randomly.
Pair Corralation between BRP and Thor Industries
Assuming the 90 days trading horizon BRP Inc is expected to generate 1.16 times more return on investment than Thor Industries. However, BRP is 1.16 times more volatile than Thor Industries. It trades about 0.13 of its potential returns per unit of risk. Thor Industries is currently generating about 0.14 per unit of risk. If you would invest 4,759 in BRP Inc on October 19, 2024 and sell it today you would earn a total of 221.00 from holding BRP Inc or generate 4.64% 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. Thor Industries
Performance |
| Timeline |
| BRP Inc |
| Thor Industries |
BRP and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Thor Industries
The main advantage of trading using opposite BRP and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.| BRP vs. MCEWEN MINING INC | BRP vs. Sterling Construction | BRP vs. De Grey Mining | BRP vs. Hitachi Construction Machinery |
| Thor Industries vs. Harley Davidson | Thor Industries vs. Harley Davidson | Thor Industries vs. BRP Inc | Thor Industries vs. Fox Factory Holding |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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