Correlation Between Malibu Boats and Brunswick
Can any of the company-specific risk be diversified away by investing in both Malibu Boats and Brunswick 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 Malibu Boats and Brunswick into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malibu Boats and Brunswick, you can compare the effects of market volatilities on Malibu Boats and Brunswick 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 Malibu Boats with a short position of Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malibu Boats and Brunswick.
Diversification Opportunities for Malibu Boats and Brunswick
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Malibu and Brunswick is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Malibu Boats 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 Malibu Boats are associated (or correlated) with Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of Malibu Boats i.e., Malibu Boats and Brunswick go up and down completely randomly.
Pair Corralation between Malibu Boats and Brunswick
Given the investment horizon of 90 days Malibu Boats is expected to generate 1.35 times more return on investment than Brunswick. However, Malibu Boats is 1.35 times more volatile than Brunswick. It trades about 0.01 of its potential returns per unit of risk. Brunswick is currently generating about 0.0 per unit of risk. If you would invest 4,364 in Malibu Boats on August 27, 2024 and sell it today you would lose (49.00) from holding Malibu Boats or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malibu Boats vs. Brunswick
Performance |
| Timeline |
| Malibu Boats |
| Brunswick |
Malibu Boats and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malibu Boats and Brunswick
The main advantage of trading using opposite Malibu Boats and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malibu Boats position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.| Malibu Boats vs. MCBC Holdings | Malibu Boats vs. Winnebago Industries | Malibu Boats vs. LCI Industries | Malibu Boats vs. Thor Industries |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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