Correlation Between Beyond Meat and BRP
Can any of the company-specific risk be diversified away by investing in both Beyond Meat 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 Beyond Meat and BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beyond Meat and BRP Inc, you can compare the effects of market volatilities on Beyond Meat 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 Beyond Meat with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beyond Meat and BRP.
Diversification Opportunities for Beyond Meat and BRP
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beyond and BRP is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Beyond Meat 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 Beyond Meat 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 Beyond Meat i.e., Beyond Meat and BRP go up and down completely randomly.
Pair Corralation between Beyond Meat and BRP
Given the investment horizon of 90 days Beyond Meat is expected to generate 1.21 times more return on investment than BRP. However, Beyond Meat is 1.21 times more volatile than BRP Inc. It trades about -0.08 of its potential returns per unit of risk. BRP Inc is currently generating about -0.4 per unit of risk. If you would invest 413.00 in Beyond Meat on November 27, 2024 and sell it today you would lose (27.00) from holding Beyond Meat or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beyond Meat vs. BRP Inc
Performance |
| Timeline |
| Beyond Meat |
| BRP Inc |
Beyond Meat and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beyond Meat and BRP
The main advantage of trading using opposite Beyond Meat and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Meat 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.| Beyond Meat vs. Kraft Heinz Co | Beyond Meat vs. Hormel Foods | Beyond Meat vs. Kellanova | Beyond Meat vs. General Mills |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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