Correlation Between BRP and MTY Food

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

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

Diversification Opportunities for BRP and MTY Food

-0.11

Correlation Coefficient

BRP  MTY Food

Good diversification

The 3 months correlation between BRP and MTY is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and MTY Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTY Food Group 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 MTY Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTY Food Group has no effect on the direction of BRP i.e., BRP and MTY Food go up and down completely randomly.

Pair Corralation between BRP and MTY Food

Assuming the 90 days trading horizon BRP Inc is expected to generate 2.06 times more return on investment than MTY Food. However, BRP is 2.06 times more volatile than MTY Food Group. It trades about 0.14 of its potential returns per unit of risk. MTY Food Group is currently generating about -0.03 per unit of risk. If you would invest  5,067  in BRP Inc on March 27, 2025 and sell it today you would earn a total of  1,518  from holding BRP Inc or generate 29.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

BRP Inc  vs.  MTY Food Group

BRP Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BRP Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BRP displayed solid returns over the last few months and may actually be approaching a breakup point.

MTY Food Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MTY Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MTY Food is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BRP and MTY Food

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

The idea behind BRP Inc and MTY Food Group 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.