Correlation Between Brunswick and Noodles
Can any of the company-specific risk be diversified away by investing in both Brunswick and Noodles 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 Noodles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Noodles Company, you can compare the effects of market volatilities on Brunswick and Noodles 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 Noodles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Noodles.
Diversification Opportunities for Brunswick and Noodles
Very good diversification
The 3 months correlation between Brunswick and Noodles is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company 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 Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of Brunswick i.e., Brunswick and Noodles go up and down completely randomly.
Pair Corralation between Brunswick and Noodles
Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.41 times more return on investment than Noodles. However, Brunswick is 2.44 times less risky than Noodles. It trades about 0.12 of its potential returns per unit of risk. Noodles Company is currently generating about -0.47 per unit of risk. If you would invest 8,162 in Brunswick on August 28, 2024 and sell it today you would earn a total of 420.00 from holding Brunswick or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. Noodles Company
Performance |
| Timeline |
| Brunswick |
| Noodles Company |
Brunswick and Noodles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and Noodles
The main advantage of trading using opposite Brunswick and Noodles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, Noodles 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 Noodles will offset losses from the drop in Noodles' long position.| Brunswick vs. MCBC Holdings | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries | Brunswick vs. Thor 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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