Correlation Between BRP and Fenbo Holdings
Can any of the company-specific risk be diversified away by investing in both BRP and Fenbo Holdings 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 Fenbo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Fenbo Holdings Limited, you can compare the effects of market volatilities on BRP and Fenbo Holdings 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 Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Fenbo Holdings.
Diversification Opportunities for BRP and Fenbo Holdings
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BRP and Fenbo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings 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 Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of BRP i.e., BRP and Fenbo Holdings go up and down completely randomly.
Pair Corralation between BRP and Fenbo Holdings
Given the investment horizon of 90 days BRP Inc is expected to generate 1.03 times more return on investment than Fenbo Holdings. However, BRP is 1.03 times more volatile than Fenbo Holdings Limited. It trades about -0.29 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about -0.39 per unit of risk. If you would invest 5,199 in BRP Inc on November 18, 2024 and sell it today you would lose (880.00) from holding BRP Inc or give up 16.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRP Inc vs. Fenbo Holdings Limited
Performance |
| Timeline |
| BRP Inc |
| Fenbo Holdings |
BRP and Fenbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Fenbo Holdings
The main advantage of trading using opposite BRP and Fenbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Fenbo Holdings 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 Fenbo Holdings will offset losses from the drop in Fenbo Holdings' long position.The idea behind BRP Inc and Fenbo Holdings Limited 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.| Fenbo Holdings vs. CDW Corp | Fenbo Holdings vs. RBC Bearings Incorporated | Fenbo Holdings vs. The Gap, | Fenbo Holdings vs. Coupang LLC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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