Correlation Between Brunswick Corp and Ford
Can any of the company-specific risk be diversified away by investing in both Brunswick Corp and Ford 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 Brunswick Corp and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick Corp and Ford Motor, you can compare the effects of market volatilities on Brunswick Corp and Ford 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 Brunswick Corp with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick Corp and Ford.
Diversification Opportunities for Brunswick Corp and Ford
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brunswick and Ford is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick Corp and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Brunswick Corp 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 Brunswick Corp are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Brunswick Corp i.e., Brunswick Corp and Ford go up and down completely randomly.
Pair Corralation between Brunswick Corp and Ford
Assuming the 90 days horizon Brunswick Corp is expected to generate 1.27 times less return on investment than Ford. But when comparing it to its historical volatility, Brunswick Corp is 1.04 times less risky than Ford. It trades about 0.03 of its potential returns per unit of risk. Ford Motor is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,290 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 71.00 from holding Ford Motor or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick Corp vs. Ford Motor
Performance |
| Timeline |
| Brunswick Corp |
| Ford Motor |
Brunswick Corp and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick Corp and Ford
The main advantage of trading using opposite Brunswick Corp and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick Corp position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Brunswick Corp vs. BRP Inc | Brunswick Corp vs. Vision Marine Technologies | Brunswick Corp vs. EZGO Technologies | Brunswick Corp vs. Harley Davidson |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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