Correlation Between BRP and Vestis
Can any of the company-specific risk be diversified away by investing in both BRP and Vestis 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 Vestis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Vestis, you can compare the effects of market volatilities on BRP and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Vestis.
Diversification Opportunities for BRP and Vestis
Significant diversification
The 3 months correlation between BRP and Vestis is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of BRP i.e., BRP and Vestis go up and down completely randomly.
Pair Corralation between BRP and Vestis
Given the investment horizon of 90 days BRP Inc is expected to under-perform the Vestis. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 2.39 times less risky than Vestis. The stock trades about -0.04 of its potential returns per unit of risk. The Vestis is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,413 in Vestis on August 28, 2024 and sell it today you would earn a total of 218.00 from holding Vestis or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRP Inc vs. Vestis
Performance |
| Timeline |
| BRP Inc |
| Vestis |
BRP and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Vestis
The main advantage of trading using opposite BRP and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.The idea behind BRP Inc and Vestis 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.| Vestis vs. PROG Holdings | Vestis vs. McGrath RentCorp | Vestis vs. Mega Matrix Corp | Vestis vs. FTAI Aviation Ltd |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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