Correlation Between Malibu Boats and Brunswick

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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

MalibuBrunswickDiversified AwayMalibuBrunswickDiversified Away100%
0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Malibu and Brunswick is 0.9. 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 1.78 times more return on investment than Brunswick. However, Malibu Boats is 1.78 times more volatile than Brunswick. It trades about 0.04 of its potential returns per unit of risk. Brunswick is currently generating about -0.22 per unit of risk. If you would invest  3,691  in Malibu Boats on November 21, 2024 and sell it today you would earn a total of  46.00  from holding Malibu Boats or generate 1.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.24%
ValuesDaily Returns

Malibu Boats  vs.  Brunswick

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -25-20-15-10-50
JavaScript chart by amCharts 3.21.15MBUU BC
       Timeline  
Malibu Boats 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Malibu Boats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb34363840424446
Brunswick 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6570758085

Malibu Boats and Brunswick Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.28-3.21-2.13-1.06-0.01650.961.952.943.934.92 0.040.060.080.100.12
JavaScript chart by amCharts 3.21.15MBUU BC
       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.
The idea behind Malibu Boats and Brunswick pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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