Correlation Between Black Knight and BRP

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Can any of the company-specific risk be diversified away by investing in both Black Knight 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 Black Knight and BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Knight and BRP Inc, you can compare the effects of market volatilities on Black Knight 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 Black Knight with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Knight and BRP.

Diversification Opportunities for Black Knight and BRP

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Black and BRP is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Black Knight and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Black Knight 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 Black Knight 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 Black Knight i.e., Black Knight and BRP go up and down completely randomly.

Pair Corralation between Black Knight and BRP

Considering the 90-day investment horizon Black Knight is expected to generate 1.8 times less return on investment than BRP. But when comparing it to its historical volatility, Black Knight is 1.41 times less risky than BRP. It trades about 0.21 of its potential returns per unit of risk. BRP Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  6,681  in BRP Inc on September 8, 2022 and sell it today you would earn a total of  983.00  from holding BRP Inc or generate 14.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Black Knight  vs.  BRP Inc

 Performance (%) 
       Timeline  
Black Knight 
Black Performance
0 of 100
Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Black Price Channel

BRP Inc 
BRP Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BRP Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, BRP disclosed solid returns over the last few months and may actually be approaching a breakup point.

BRP Price Channel

Black Knight and BRP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Black Knight and BRP

The main advantage of trading using opposite Black Knight and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Knight 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.
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The idea behind Black Knight 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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Check out your portfolio center. 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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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