Correlation Between Brunswick and Tarena International
Can any of the company-specific risk be diversified away by investing in both Brunswick and Tarena International 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 Tarena International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Tarena International, you can compare the effects of market volatilities on Brunswick and Tarena International 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 Tarena International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Tarena International.
Diversification Opportunities for Brunswick and Tarena International
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Brunswick and Tarena is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Tarena International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena International 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 Tarena International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena International has no effect on the direction of Brunswick i.e., Brunswick and Tarena International go up and down completely randomly.
Pair Corralation between Brunswick and Tarena International
Allowing for the 90-day total investment horizon Brunswick is expected to generate 23.87 times less return on investment than Tarena International. But when comparing it to its historical volatility, Brunswick is 4.03 times less risky than Tarena International. It trades about 0.0 of its potential returns per unit of risk. Tarena International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Tarena International on September 2, 2024 and sell it today you would lose (16.00) from holding Tarena International or give up 16.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. Tarena International
Performance |
| Timeline |
| Brunswick |
| Tarena International |
Brunswick and Tarena International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and Tarena International
The main advantage of trading using opposite Brunswick and Tarena International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, Tarena International 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 Tarena International will offset losses from the drop in Tarena International's long position.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| Tarena International vs. Catalent | Tarena International vs. Marine Products | Tarena International vs. BRP Inc | Tarena International vs. Brunswick |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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