Correlation Between BRP and VOXX International

Can any of the company-specific risk be diversified away by investing in both BRP and VOXX International 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 VOXX International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BRP Inc and VOXX International, you can compare the effects of market volatilities on BRP and VOXX International 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 VOXX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and VOXX International.

Diversification Opportunities for BRP and VOXX International

-0.05

Correlation Coefficient

BRP  VOXX International

Good diversification

The 3 months correlation between BRP and VOXX is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International 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 VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of BRP i.e., BRP and VOXX International go up and down completely randomly.

Pair Corralation between BRP and VOXX International

Given the investment horizon of 90 days BRP Inc is expected to under-perform the VOXX International. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 1.64 times less risky than VOXX International. The stock trades about 0.0 of its potential returns per unit of risk. The VOXX International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  775.00  in VOXX International on January 24, 2024 and sell it today you would lose (92.00) from holding VOXX International or give up 11.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BRP Inc  vs.  VOXX International

BRP Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BRP Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BRP is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

VOXX International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VOXX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BRP and VOXX International

The main advantage of trading using opposite BRP and VOXX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, VOXX International 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 VOXX International will offset losses from the drop in VOXX International's long position.

The idea behind BRP Inc and VOXX International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.