Correlation Between Brunswick and Lipocine
Can any of the company-specific risk be diversified away by investing in both Brunswick and Lipocine 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 Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Lipocine, you can compare the effects of market volatilities on Brunswick and Lipocine 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 Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Lipocine.
Diversification Opportunities for Brunswick and Lipocine
Good diversification
The 3 months correlation between Brunswick and Lipocine is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Brunswick i.e., Brunswick and Lipocine go up and down completely randomly.
Pair Corralation between Brunswick and Lipocine
Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 2.19 times less risky than Lipocine. The stock trades about -0.31 of its potential returns per unit of risk. The Lipocine is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 476.00 in Lipocine on September 20, 2024 and sell it today you would lose (2.00) from holding Lipocine or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. Lipocine
Performance |
| Timeline |
| Brunswick |
| Lipocine |
Brunswick and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and Lipocine
The main advantage of trading using opposite Brunswick and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, Lipocine 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 Lipocine will offset losses from the drop in Lipocine's long position.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| Lipocine vs. Emergent Biosolutions | Lipocine vs. Neurocrine Biosciences | Lipocine vs. Teva Pharma Industries | Lipocine vs. Haleon plc |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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