Correlation Between United Parks and BRP

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

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

Diversification Opportunities for United Parks and BRP

-0.81

Correlation Coefficient

United Parks  BRP

Pay attention - limited upside

The 3 months correlation between United and BRP is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Parks Resorts and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and United Parks 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 United Parks Resorts 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 United Parks i.e., United Parks and BRP go up and down completely randomly.

Pair Corralation between United Parks and BRP

Given the investment horizon of 90 days United Parks Resorts is expected to under-perform the BRP. But the stock apears to be less risky and, when comparing its historical volatility, United Parks Resorts is 1.24 times less risky than BRP. The stock trades about -0.13 of its potential returns per unit of risk. The BRP Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,873  in BRP Inc on September 30, 2024 and sell it today you would earn a total of  161.00  from holding BRP Inc or generate 3.3% return on investment over 90 days.

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

United Parks Resorts  vs.  BRP Inc

United Parks Resorts

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, United Parks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with United Parks and BRP

The main advantage of trading using opposite United Parks and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parks 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 United Parks Resorts 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.