Correlation Between Enghouse Systems and BRP
Can any of the company-specific risk be diversified away by investing in both Enghouse Systems and BRP 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 Enghouse Systems and BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enghouse Systems and BRP Inc, you can compare the effects of market volatilities on Enghouse Systems and BRP 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 Enghouse Systems with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enghouse Systems and BRP.
Diversification Opportunities for Enghouse Systems and BRP
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Enghouse and BRP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Enghouse Systems and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Enghouse Systems 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 Enghouse Systems are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Enghouse Systems i.e., Enghouse Systems and BRP go up and down completely randomly.
Pair Corralation between Enghouse Systems and BRP
Assuming the 90 days trading horizon Enghouse Systems is expected to generate 0.66 times more return on investment than BRP. However, Enghouse Systems is 1.51 times less risky than BRP. It trades about 0.02 of its potential returns per unit of risk. BRP Inc is currently generating about -0.07 per unit of risk. If you would invest 2,842 in Enghouse Systems on September 3, 2024 and sell it today you would earn a total of 75.00 from holding Enghouse Systems or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enghouse Systems vs. BRP Inc
Performance |
| Timeline |
| Enghouse Systems |
| BRP Inc |
Enghouse Systems and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enghouse Systems and BRP
The main advantage of trading using opposite Enghouse Systems and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enghouse Systems position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.| Enghouse Systems vs. Kinaxis | Enghouse Systems vs. Open Text Corp | Enghouse Systems vs. Descartes Systems Group | Enghouse Systems vs. Constellation Software |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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