Correlation Between Brunswick and BrightSpring Health

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

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

Diversification Opportunities for Brunswick and BrightSpring Health

-0.11

Correlation Coefficient

Brunswick  BrightSpring Health

Good diversification

The 3 months correlation between Brunswick and BrightSpring is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and BrightSpring Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightSpring Health 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 BrightSpring Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightSpring Health has no effect on the direction of Brunswick i.e., Brunswick and BrightSpring Health go up and down completely randomly.

Pair Corralation between Brunswick and BrightSpring Health

Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the BrightSpring Health. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 1.44 times less risky than BrightSpring Health. The stock trades about -0.26 of its potential returns per unit of risk. The BrightSpring Health Services, is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,738  in BrightSpring Health Services, on December 4, 2024 and sell it today you would lose (45.00) from holding BrightSpring Health Services, or give up 0.67% of portfolio value over 90 days.

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

Brunswick  vs.  BrightSpring Health Services,

Brunswick

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BrightSpring Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days BrightSpring Health Services, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BrightSpring Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Brunswick and BrightSpring Health

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

The idea behind Brunswick and BrightSpring Health Services, 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.