Correlation Between Brunswick and Leslies
Can any of the company-specific risk be diversified away by investing in both Brunswick and Leslies 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 Leslies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Leslies, you can compare the effects of market volatilities on Brunswick and Leslies 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 Leslies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Leslies.
Diversification Opportunities for Brunswick and Leslies
Very poor diversification
The 3 months correlation between Brunswick and Leslies is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Leslies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leslies 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 Leslies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leslies has no effect on the direction of Brunswick i.e., Brunswick and Leslies go up and down completely randomly.
Pair Corralation between Brunswick and Leslies
Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.36 times more return on investment than Leslies. However, Brunswick is 2.78 times less risky than Leslies. It trades about -0.03 of its potential returns per unit of risk. Leslies is currently generating about -0.04 per unit of risk. If you would invest 8,420 in Brunswick on November 9, 2024 and sell it today you would lose (1,785) from holding Brunswick or give up 21.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. Leslies
Performance |
| Timeline |
| Brunswick |
| Leslies |
Brunswick and Leslies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and Leslies
The main advantage of trading using opposite Brunswick and Leslies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, Leslies 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 Leslies will offset losses from the drop in Leslies' long position.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| Leslies vs. Sally Beauty Holdings | Leslies vs. ODP Corp | Leslies vs. 1 800 FLOWERSCOM | Leslies vs. Caseys General Stores |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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