Correlation Between Brunswick and First Ship
Can any of the company-specific risk be diversified away by investing in both Brunswick and First Ship 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 First Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and First Ship Lease, you can compare the effects of market volatilities on Brunswick and First Ship 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 First Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and First Ship.
Diversification Opportunities for Brunswick and First Ship
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brunswick and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and First Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ship Lease 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 First Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ship Lease has no effect on the direction of Brunswick i.e., Brunswick and First Ship go up and down completely randomly.
Pair Corralation between Brunswick and First Ship
Allowing for the 90-day total investment horizon Brunswick is expected to generate 3.15 times less return on investment than First Ship. But when comparing it to its historical volatility, Brunswick is 1.3 times less risky than First Ship. It trades about 0.02 of its potential returns per unit of risk. First Ship Lease is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.50 in First Ship Lease on August 31, 2024 and sell it today you would earn a total of 1.50 from holding First Ship Lease or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Brunswick vs. First Ship Lease
Performance |
| Timeline |
| Brunswick |
| First Ship Lease |
Brunswick and First Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and First Ship
The main advantage of trading using opposite Brunswick and First Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, First Ship 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 First Ship will offset losses from the drop in First Ship's long position.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| First Ship vs. United Rentals | First Ship vs. Ashtead Gro | First Ship vs. Ashtead Group plc | First Ship vs. AerCap Holdings NV |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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