Correlation Between Brunswick and American Rebel

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

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

Diversification Opportunities for Brunswick and American Rebel

0.26

Correlation Coefficient

Brunswick  American Rebel

Modest diversification

The 3 months correlation between Brunswick and American is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and American Rebel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Rebel Holdings and Brunswick 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 are associated (or correlated) with American Rebel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Rebel Holdings has no effect on the direction of Brunswick i.e., Brunswick and American Rebel go up and down completely randomly.

Pair Corralation between Brunswick and American Rebel

Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the American Rebel. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 15.78 times less risky than American Rebel. The stock trades about -0.8 of its potential returns per unit of risk. The American Rebel Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.82  in American Rebel Holdings on September 27, 2024 and sell it today you would earn a total of  0.23  from holding American Rebel Holdings or generate 28.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Brunswick  vs.  American Rebel Holdings

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

American Rebel Holdings

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Rebel Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, American Rebel showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunswick and American Rebel

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

The idea behind Brunswick and American Rebel Holdings 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.