Correlation Between Under Armour and BRP

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

By analyzing existing cross correlation between Under Armour C and BRP Inc, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and BRP.

Diversification Opportunities for Under Armour and BRP

-0.46

Correlation Coefficient

Under Armour  BRP

Very good diversification

The 3 months correlation between Under and BRP is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and BRP go up and down completely randomly.

Pair Corralation between Under Armour and BRP

Allowing for the 90-day total investment horizon Under Armour C is expected to generate 0.59 times more return on investment than BRP. However, Under Armour C is 1.69 times less risky than BRP. It trades about 0.03 of its potential returns per unit of risk. BRP Inc is currently generating about -0.12 per unit of risk. If you would invest  652.00  in Under Armour C on February 7, 2024 and sell it today you would earn a total of  3.00  from holding Under Armour C or generate 0.46% return on investment over 90 days.

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

Under Armour C  vs.  BRP Inc

Under Armour C

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Under Armour C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BRP Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BRP Inc are ranked lower than 1 (%) 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.

Pair Trading with Under Armour and BRP

The main advantage of trading using opposite Under Armour and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.

The idea behind Under Armour C and BRP Inc 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.