Correlation Between Brunswick and MCBC Holdings

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

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

Diversification Opportunities for Brunswick and MCBC Holdings

0.72

Correlation Coefficient

Brunswick  MCBC Holdings

Poor diversification

The 3 months correlation between Brunswick and MCBC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC 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 MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Brunswick i.e., Brunswick and MCBC Holdings go up and down completely randomly.

Pair Corralation between Brunswick and MCBC Holdings

Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the MCBC Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 1.42 times less risky than MCBC Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The MCBC Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,896  in MCBC Holdings on December 28, 2024 and sell it today you would lose (172.00) from holding MCBC Holdings or give up 9.07% of portfolio value over 90 days.

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

Brunswick  vs.  MCBC Holdings

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.

MCBC Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days MCBC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Brunswick and MCBC Holdings

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

The idea behind Brunswick and MCBC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.