Correlation Between BRP and Sonos

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

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

Diversification Opportunities for BRP and Sonos

-0.12

Correlation Coefficient

BRP  Sonos

Good diversification

The 3 months correlation between BRP and Sonos is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of BRP i.e., BRP and Sonos go up and down completely randomly.

Pair Corralation between BRP and Sonos

Given the investment horizon of 90 days BRP Inc is expected to generate 1.36 times more return on investment than Sonos. However, BRP is 1.36 times more volatile than Sonos Inc. It trades about -0.1 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.33 per unit of risk. If you would invest  7,201  in BRP Inc on January 29, 2024 and sell it today you would lose (327.00) from holding BRP Inc or give up 4.54% 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.  Sonos Inc

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 newest stock price disarray, may contribute to short-term losses for the investors.

Sonos Inc

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with BRP and Sonos

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

The idea behind BRP Inc and Sonos 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.