Correlation Between Brinks and HD Supply

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

By analyzing existing cross correlation between Brinks Company and HD Supply Holdings, you can compare the effects of market volatilities on Brinks and HD Supply 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 Brinks with a short position of HD Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinks and HD Supply.

Diversification Opportunities for Brinks and HD Supply

0.0

Correlation Coefficient

Brinks  HD Supply

Pay attention - limited upside

The 3 months correlation between Brinks and HDS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brinks Company and HD Supply Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HD Supply Holdings and Brinks 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 Brinks Company are associated (or correlated) with HD Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HD Supply Holdings has no effect on the direction of Brinks i.e., Brinks and HD Supply go up and down completely randomly.

Pair Corralation between Brinks and HD Supply

If you would invest  7,045  in Brinks Company on February 2, 2024 and sell it today you would earn a total of  1,843  from holding Brinks Company or generate 26.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Brinks Company  vs.  HD Supply Holdings

Brinks Company

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brinks Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Brinks may actually be approaching a critical reversion point that can send shares even higher in June 2024.

HD Supply Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HD Supply Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, HD Supply is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Brinks and HD Supply

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

The idea behind Brinks Company and HD Supply Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.