Correlation Between BRP and Kontoor Brands
Can any of the company-specific risk be diversified away by investing in both BRP and Kontoor Brands 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 Kontoor Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Kontoor Brands, you can compare the effects of market volatilities on BRP and Kontoor Brands 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 Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Kontoor Brands.
Diversification Opportunities for BRP and Kontoor Brands
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BRP and Kontoor is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands 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 Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of BRP i.e., BRP and Kontoor Brands go up and down completely randomly.
Pair Corralation between BRP and Kontoor Brands
Given the investment horizon of 90 days BRP Inc is expected to under-perform the Kontoor Brands. In addition to that, BRP is 1.06 times more volatile than Kontoor Brands. It trades about -0.06 of its total potential returns per unit of risk. Kontoor Brands is currently generating about 0.13 per unit of volatility. If you would invest 5,782 in Kontoor Brands on August 27, 2024 and sell it today you would earn a total of 3,356 from holding Kontoor Brands or generate 58.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRP Inc vs. Kontoor Brands
Performance |
| Timeline |
| BRP Inc |
| Kontoor Brands |
BRP and Kontoor Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Kontoor Brands
The main advantage of trading using opposite BRP and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Kontoor Brands 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 Kontoor Brands will offset losses from the drop in Kontoor Brands' long position.The idea behind BRP Inc and Kontoor Brands 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.| Kontoor Brands vs. VF Corporation | Kontoor Brands vs. Levi Strauss Co | Kontoor Brands vs. Under Armour A | Kontoor Brands vs. Oxford Industries |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |