Correlation Between BRP and Wolverine World
Can any of the company-specific risk be diversified away by investing in both BRP and Wolverine World 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 Wolverine World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Wolverine World Wide, you can compare the effects of market volatilities on BRP and Wolverine World 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 Wolverine World. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Wolverine World.
Diversification Opportunities for BRP and Wolverine World
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BRP and Wolverine is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Wolverine World Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolverine World Wide 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 Wolverine World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolverine World Wide has no effect on the direction of BRP i.e., BRP and Wolverine World go up and down completely randomly.
Pair Corralation between BRP and Wolverine World
Given the investment horizon of 90 days BRP Inc is expected to under-perform the Wolverine World. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 1.74 times less risky than Wolverine World. The stock trades about -0.03 of its potential returns per unit of risk. The Wolverine World Wide is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 976.00 in Wolverine World Wide on August 30, 2024 and sell it today you would earn a total of 1,341 from holding Wolverine World Wide or generate 137.4% 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. Wolverine World Wide
Performance |
| Timeline |
| BRP Inc |
| Wolverine World Wide |
BRP and Wolverine World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Wolverine World
The main advantage of trading using opposite BRP and Wolverine World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, Wolverine World 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 Wolverine World will offset losses from the drop in Wolverine World's long position.The idea behind BRP Inc and Wolverine World Wide 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.| Wolverine World vs. Steven Madden | Wolverine World vs. Caleres | Wolverine World vs. Weyco Group | Wolverine World vs. Designer Brands |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |