Correlation Between Brunswick and United Parks
Can any of the company-specific risk be diversified away by investing in both Brunswick and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and United Parks Resorts, you can compare the effects of market volatilities on Brunswick and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and United Parks.
Diversification Opportunities for Brunswick and United Parks
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brunswick and United is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Brunswick i.e., Brunswick and United Parks go up and down completely randomly.
Pair Corralation between Brunswick and United Parks
Allowing for the 90-day total investment horizon Brunswick is expected to generate 2.32 times less return on investment than United Parks. But when comparing it to its historical volatility, Brunswick is 1.18 times less risky than United Parks. It trades about 0.09 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,218 in United Parks Resorts on August 25, 2024 and sell it today you would earn a total of 463.00 from holding United Parks Resorts or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. United Parks Resorts
Performance |
| Timeline |
| Brunswick |
| United Parks Resorts |
Brunswick and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and United Parks
The main advantage of trading using opposite Brunswick and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| United Parks vs. Edgewell Personal Care | United Parks vs. Mannatech Incorporated | United Parks vs. FactSet Research Systems | United Parks vs. NetSol Technologies |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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