Correlation Between Microsoft and Brunswick Corp
Can any of the company-specific risk be diversified away by investing in both Microsoft and Brunswick Corp 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 Microsoft and Brunswick Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Brunswick Corp, you can compare the effects of market volatilities on Microsoft and Brunswick Corp 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 Microsoft with a short position of Brunswick Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Brunswick Corp.
Diversification Opportunities for Microsoft and Brunswick Corp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Brunswick is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp and Microsoft 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 Microsoft are associated (or correlated) with Brunswick Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Corp has no effect on the direction of Microsoft i.e., Microsoft and Brunswick Corp go up and down completely randomly.
Pair Corralation between Microsoft and Brunswick Corp
Given the investment horizon of 90 days Microsoft is expected to under-perform the Brunswick Corp. In addition to that, Microsoft is 2.07 times more volatile than Brunswick Corp. It trades about -0.03 of its total potential returns per unit of risk. Brunswick Corp is currently generating about -0.05 per unit of volatility. If you would invest 2,482 in Brunswick Corp on August 28, 2024 and sell it today you would lose (34.00) from holding Brunswick Corp or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Brunswick Corp
Performance |
| Timeline |
| Microsoft |
| Brunswick Corp |
Microsoft and Brunswick Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Brunswick Corp
The main advantage of trading using opposite Microsoft and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Brunswick Corp 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 Corp will offset losses from the drop in Brunswick Corp's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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