Correlation Between Park Ohio and Brunswick
Can any of the company-specific risk be diversified away by investing in both Park Ohio 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 Park Ohio and Brunswick into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Brunswick, you can compare the effects of market volatilities on Park Ohio 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 Park Ohio with a short position of Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Brunswick.
Diversification Opportunities for Park Ohio and Brunswick
Very weak diversification
The 3 months correlation between Park and Brunswick is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Park Ohio 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 Park Ohio Holdings 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 Park Ohio i.e., Park Ohio and Brunswick go up and down completely randomly.
Pair Corralation between Park Ohio and Brunswick
Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 1.26 times more return on investment than Brunswick. However, Park Ohio is 1.26 times more volatile than Brunswick. It trades about 0.06 of its potential returns per unit of risk. Brunswick is currently generating about 0.03 per unit of risk. If you would invest 3,027 in Park Ohio Holdings on August 29, 2024 and sell it today you would earn a total of 240.00 from holding Park Ohio Holdings or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. Brunswick
Performance |
| Timeline |
| Park Ohio Holdings |
| Brunswick |
Park Ohio and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and Brunswick
The main advantage of trading using opposite Park Ohio and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio 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.| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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