Correlation Between Zhihu and Brunswick Corp
Can any of the company-specific risk be diversified away by investing in both Zhihu 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 Zhihu and Brunswick Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhihu Inc ADR and Brunswick Corp, you can compare the effects of market volatilities on Zhihu 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 Zhihu with a short position of Brunswick Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and Brunswick Corp.
Diversification Opportunities for Zhihu and Brunswick Corp
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zhihu and Brunswick is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp and Zhihu 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 Zhihu Inc ADR 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 Zhihu i.e., Zhihu and Brunswick Corp go up and down completely randomly.
Pair Corralation between Zhihu and Brunswick Corp
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the Brunswick Corp. In addition to that, Zhihu is 4.49 times more volatile than Brunswick Corp. It trades about -0.02 of its total potential returns per unit of risk. Brunswick Corp is currently generating about 0.03 per unit of volatility. If you would invest 2,275 in Brunswick Corp on August 31, 2024 and sell it today you would earn a total of 203.00 from holding Brunswick Corp or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. Brunswick Corp
Performance |
| Timeline |
| Zhihu Inc ADR |
| Brunswick Corp |
Zhihu and Brunswick Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and Brunswick Corp
The main advantage of trading using opposite Zhihu and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu 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.The idea behind Zhihu Inc ADR and Brunswick Corp 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.| Brunswick Corp vs. BRP Inc | Brunswick Corp vs. Vision Marine Technologies | Brunswick Corp vs. EZGO Technologies | Brunswick Corp vs. Harley Davidson |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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