Correlation Between Brunswick and BrightSpring Health
Can any of the company-specific risk be diversified away by investing in both Brunswick and BrightSpring Health 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 and BrightSpring Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and BrightSpring Health Services,, you can compare the effects of market volatilities on Brunswick and BrightSpring Health 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 with a short position of BrightSpring Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and BrightSpring Health.
Diversification Opportunities for Brunswick and BrightSpring Health
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brunswick and BrightSpring is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and BrightSpring Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightSpring Health and Brunswick 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 are associated (or correlated) with BrightSpring Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightSpring Health has no effect on the direction of Brunswick i.e., Brunswick and BrightSpring Health go up and down completely randomly.
Pair Corralation between Brunswick and BrightSpring Health
Allowing for the 90-day total investment horizon Brunswick is expected to generate 5.78 times less return on investment than BrightSpring Health. But when comparing it to its historical volatility, Brunswick is 1.01 times less risky than BrightSpring Health. It trades about 0.02 of its potential returns per unit of risk. BrightSpring Health Services, is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,351 in BrightSpring Health Services, on September 14, 2024 and sell it today you would earn a total of 2,208 from holding BrightSpring Health Services, or generate 50.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.25% |
| Values | Daily Returns |
Brunswick vs. BrightSpring Health Services,
Performance |
| Timeline |
| Brunswick |
| BrightSpring Health |
Brunswick and BrightSpring Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and BrightSpring Health
The main advantage of trading using opposite Brunswick and BrightSpring Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, BrightSpring Health 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 BrightSpring Health will offset losses from the drop in BrightSpring Health's long position.| Brunswick vs. Clarus Corp | Brunswick vs. Johnson Outdoors | Brunswick vs. JAKKS Pacific | Brunswick vs. OneSpaWorld Holdings |
| BrightSpring Health vs. WiMi Hologram Cloud | BrightSpring Health vs. Brunswick | BrightSpring Health vs. Sphere Entertainment Co | BrightSpring Health vs. Skechers USA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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