Correlation Between BRP and Callaway Golf
Can any of the company-specific risk be diversified away by investing in both BRP and Callaway Golf 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 Callaway Golf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Callaway Golf, you can compare the effects of market volatilities on BRP and Callaway Golf 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 Callaway Golf. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Callaway Golf.
Diversification Opportunities for BRP and Callaway Golf
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRP and Callaway is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Callaway Golf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callaway Golf 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 Callaway Golf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callaway Golf has no effect on the direction of BRP i.e., BRP and Callaway Golf go up and down completely randomly.
Pair Corralation between BRP and Callaway Golf
Given the investment horizon of 90 days BRP Inc is expected to generate 0.55 times more return on investment than Callaway Golf. However, BRP Inc is 1.82 times less risky than Callaway Golf. It trades about -0.04 of its potential returns per unit of risk. Callaway Golf is currently generating about -0.16 per unit of risk. If you would invest 5,171 in BRP Inc on August 28, 2024 and sell it today you would lose (87.00) from holding BRP Inc or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRP Inc vs. Callaway Golf
Performance |
| Timeline |
| BRP Inc |
| Callaway Golf |
BRP and Callaway Golf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Callaway Golf
The main advantage of trading using opposite BRP and Callaway Golf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Callaway Golf 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 Callaway Golf will offset losses from the drop in Callaway Golf's long position.The idea behind BRP Inc and Callaway Golf 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.| Callaway Golf vs. Bowlero Corp | Callaway Golf vs. Johnson Outdoors | Callaway Golf vs. YETI Holdings | Callaway Golf vs. Xponential Fitness |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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