Correlation Between Brunswick Corp and JBDI Holdings

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

By analyzing existing cross correlation between Brunswick Corp and JBDI Holdings Limited, you can compare the effects of market volatilities on Brunswick Corp and JBDI Holdings 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 JBDI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick Corp and JBDI Holdings.

Diversification Opportunities for Brunswick Corp and JBDI Holdings

0.2

Correlation Coefficient

Brunswick Corp  JBDI Holdings

Modest diversification

The 3 months correlation between Brunswick and JBDI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick Corp and JBDI Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBDI Holdings Limited 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 JBDI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBDI Holdings Limited has no effect on the direction of Brunswick Corp i.e., Brunswick Corp and JBDI Holdings go up and down completely randomly.

Pair Corralation between Brunswick Corp and JBDI Holdings

Assuming the 90 days horizon Brunswick Corp is expected to generate 2.97 times less return on investment than JBDI Holdings. But when comparing it to its historical volatility, Brunswick Corp is 6.82 times less risky than JBDI Holdings. It trades about 0.13 of its potential returns per unit of risk. JBDI Holdings Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  57.00  in JBDI Holdings Limited on September 27, 2024 and sell it today you would earn a total of  2.00  from holding JBDI Holdings Limited or generate 3.51% return on investment over 90 days.

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

Brunswick Corp  vs.  JBDI Holdings Limited

Brunswick Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

JBDI Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JBDI Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Brunswick Corp and JBDI Holdings

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

The idea behind Brunswick Corp and JBDI Holdings Limited 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.