Correlation Between GP Act and BRP
Can any of the company-specific risk be diversified away by investing in both GP Act 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 GP Act and BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Act III Acquisition and BRP Inc, you can compare the effects of market volatilities on GP Act 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 GP Act with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Act and BRP.
Diversification Opportunities for GP Act and BRP
Excellent diversification
The 3 months correlation between GPAT and BRP is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding GP Act III Acquisition and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and GP Act 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 GP Act III Acquisition 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 GP Act i.e., GP Act and BRP go up and down completely randomly.
Pair Corralation between GP Act and BRP
Given the investment horizon of 90 days GP Act III Acquisition is expected to generate 0.05 times more return on investment than BRP. However, GP Act III Acquisition is 19.29 times less risky than BRP. It trades about 0.12 of its potential returns per unit of risk. BRP Inc is currently generating about -0.02 per unit of risk. If you would invest 999.00 in GP Act III Acquisition on September 4, 2024 and sell it today you would earn a total of 15.00 from holding GP Act III Acquisition or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 43.72% |
| Values | Daily Returns |
GP Act III Acquisition vs. BRP Inc
Performance |
| Timeline |
| GP Act III |
| BRP Inc |
GP Act and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Act and BRP
The main advantage of trading using opposite GP Act and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Act 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.| GP Act vs. BRP Inc | GP Act vs. Universal Display | GP Act vs. CECO Environmental Corp | GP Act vs. Olympic Steel |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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