Correlation Between BRP and Under Armour

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Can any of the company-specific risk be diversified away by investing in both BRP and Under Armour 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 Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Under Armour A, you can compare the effects of market volatilities on BRP and Under Armour 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 Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Under Armour.

Diversification Opportunities for BRP and Under Armour

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BRP and Under is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Under Armour A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour A 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour A has no effect on the direction of BRP i.e., BRP and Under Armour go up and down completely randomly.

Pair Corralation between BRP and Under Armour

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Under Armour. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 2.43 times less risky than Under Armour. The stock trades about -0.21 of its potential returns per unit of risk. The Under Armour A is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  891.00  in Under Armour A on August 30, 2024 and sell it today you would earn a total of  79.00  from holding Under Armour A or generate 8.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BRP Inc  vs.  Under Armour A

 Performance 
       Timeline  
BRP Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
Under Armour A 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Under Armour sustained solid returns over the last few months and may actually be approaching a breakup point.

BRP and Under Armour Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BRP and Under Armour

The main advantage of trading using opposite BRP and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.
The idea behind BRP Inc and Under Armour A 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.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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