Correlation Between Boralex and BRP
Can any of the company-specific risk be diversified away by investing in both Boralex 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 Boralex and BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boralex and BRP Inc, you can compare the effects of market volatilities on Boralex 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 Boralex with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boralex and BRP.
Diversification Opportunities for Boralex and BRP
Modest diversification
The 3 months correlation between Boralex and BRP is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Boralex and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Boralex 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 Boralex 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 Boralex i.e., Boralex and BRP go up and down completely randomly.
Pair Corralation between Boralex and BRP
Assuming the 90 days trading horizon Boralex is expected to generate 0.69 times more return on investment than BRP. However, Boralex is 1.45 times less risky than BRP. It trades about -0.06 of its potential returns per unit of risk. BRP Inc is currently generating about -0.07 per unit of risk. If you would invest 3,447 in Boralex on September 1, 2024 and sell it today you would lose (433.00) from holding Boralex or give up 12.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boralex vs. BRP Inc
Performance |
| Timeline |
| Boralex |
| BRP Inc |
Boralex and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boralex and BRP
The main advantage of trading using opposite Boralex and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boralex 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.| Boralex vs. Innergex Renewable Energy | Boralex vs. Northland Power | Boralex vs. Capital Power | Boralex vs. Brookfield Renewable Partners |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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