Correlation Between BRC and Vita Coco

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

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

Diversification Opportunities for BRC and Vita Coco

-0.16

Correlation Coefficient

BRC  Vita Coco

Good diversification

The 3 months correlation between BRC and Vita is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco and BRC 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 BRC Inc are associated (or correlated) with Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of BRC i.e., BRC and Vita Coco go up and down completely randomly.

Pair Corralation between BRC and Vita Coco

Given the investment horizon of 90 days BRC Inc is expected to generate 2.72 times more return on investment than Vita Coco. However, BRC is 2.72 times more volatile than Vita Coco. It trades about 0.05 of its potential returns per unit of risk. Vita Coco is currently generating about -0.03 per unit of risk. If you would invest  153.00  in BRC Inc on May 7, 2025 and sell it today you would earn a total of  12.00  from holding BRC Inc or generate 7.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

BRC Inc  vs.  Vita Coco

BRC Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BRC Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, BRC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vita Coco

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BRC and Vita Coco

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

The idea behind BRC Inc and Vita Coco 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.

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 the Transaction History module to view history of all your transactions and understand their impact on performance.