Correlation Between BRP and Smithfield Foods,

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

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

Diversification Opportunities for BRP and Smithfield Foods,

0.87

Correlation Coefficient

BRP  Smithfield Foods,

Very poor diversification

The 3 months correlation between BRP and Smithfield is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Smithfield Foods, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithfield Foods, Common 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 Smithfield Foods,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithfield Foods, Common has no effect on the direction of BRP i.e., BRP and Smithfield Foods, go up and down completely randomly.

Pair Corralation between BRP and Smithfield Foods,

Given the investment horizon of 90 days BRP Inc is expected to generate 2.38 times more return on investment than Smithfield Foods,. However, BRP is 2.38 times more volatile than Smithfield Foods, Common. It trades about 0.22 of its potential returns per unit of risk. Smithfield Foods, Common is currently generating about 0.17 per unit of risk. If you would invest  3,452  in BRP Inc on May 7, 2025 and sell it today you would earn a total of  1,572  from holding BRP Inc or generate 45.54% return on investment over 90 days.

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

BRP Inc  vs.  Smithfield Foods, Common

BRP Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BRP Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, BRP displayed solid returns over the last few months and may actually be approaching a breakup point.

Smithfield Foods, Common

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smithfield Foods, Common are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Smithfield Foods, exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRP and Smithfield Foods,

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

The idea behind BRP Inc and Smithfield Foods, Common 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.