Correlation Between Brunswick and Canada Goose

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

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

Diversification Opportunities for Brunswick and Canada Goose

0.29

Correlation Coefficient

Brunswick  Canada Goose

Modest diversification

The 3 months correlation between Brunswick and Canada is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose 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 Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of Brunswick i.e., Brunswick and Canada Goose go up and down completely randomly.

Pair Corralation between Brunswick and Canada Goose

Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.69 times more return on investment than Canada Goose. However, Brunswick is 1.44 times less risky than Canada Goose. It trades about 0.01 of its potential returns per unit of risk. Canada Goose Holdings is currently generating about -0.02 per unit of risk. If you would invest  6,926  in Brunswick on September 23, 2024 and sell it today you would lose (251.00) from holding Brunswick or give up 3.62% of portfolio value over 90 days.

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

Brunswick  vs.  Canada Goose 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.

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canada Goose is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Brunswick and Canada Goose

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

The idea behind Brunswick and Canada Goose 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.