Correlation Between Brunswick Corp and Leisure Fund

Can any of the company-specific risk be diversified away by investing in both Brunswick Corp and Leisure Fund 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 Brunswick Corp and Leisure Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brunswick Corp and Leisure Fund Class, you can compare the effects of market volatilities on Brunswick Corp and Leisure Fund 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 Brunswick Corp with a short position of Leisure Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick Corp and Leisure Fund.

Diversification Opportunities for Brunswick Corp and Leisure Fund

-0.47

Correlation Coefficient

Brunswick Corp  Leisure Fund

Very good diversification

The 3 months correlation between Brunswick and Leisure is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick Corp and Leisure Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leisure Fund Class and Brunswick Corp 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 Brunswick Corp are associated (or correlated) with Leisure Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leisure Fund Class has no effect on the direction of Brunswick Corp i.e., Brunswick Corp and Leisure Fund go up and down completely randomly.

Pair Corralation between Brunswick Corp and Leisure Fund

Assuming the 90 days horizon Brunswick Corp is expected to generate 0.77 times more return on investment than Leisure Fund. However, Brunswick Corp is 1.29 times less risky than Leisure Fund. It trades about 0.08 of its potential returns per unit of risk. Leisure Fund Class is currently generating about -0.28 per unit of risk. If you would invest  2,428  in Brunswick Corp on October 4, 2024 and sell it today you would earn a total of  29.00  from holding Brunswick Corp or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brunswick Corp  vs.  Leisure Fund Class

Brunswick Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Brunswick Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leisure Fund Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Fund Class are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leisure Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brunswick Corp and Leisure Fund

The main advantage of trading using opposite Brunswick Corp and Leisure Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick Corp position performs unexpectedly, Leisure Fund 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 Leisure Fund will offset losses from the drop in Leisure Fund's long position.

The idea behind Brunswick Corp and Leisure Fund Class 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.