Correlation Between Brunswick and BRP
Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and BRP Inc, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and BRP.
Diversification Opportunities for Brunswick and BRP
Very good diversification
The 3 months correlation between Brunswick and BRP is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 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 Brunswick i.e., Brunswick and BRP go up and down completely randomly.
Pair Corralation between Brunswick and BRP
Allowing for the 90-day total investment horizon Brunswick is expected to generate 1.49 times more return on investment than BRP. However, Brunswick is 1.49 times more volatile than BRP Inc. It trades about 0.13 of its potential returns per unit of risk. BRP Inc is currently generating about -0.18 per unit of risk. If you would invest 7,660 in Brunswick on August 24, 2024 and sell it today you would earn a total of 453.00 from holding Brunswick or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. BRP Inc
Performance |
| Timeline |
| Brunswick |
| BRP Inc |
Brunswick and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and BRP
The main advantage of trading using opposite Brunswick and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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