Correlation Between Brunswick and Orchestra BioMed

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

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

Diversification Opportunities for Brunswick and Orchestra BioMed

0.02

Correlation Coefficient

Brunswick  Orchestra BioMed

Significant diversification

The 3 months correlation between Brunswick and Orchestra is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed 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 Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Brunswick i.e., Brunswick and Orchestra BioMed go up and down completely randomly.

Pair Corralation between Brunswick and Orchestra BioMed

Allowing for the 90-day total investment horizon Brunswick is expected to generate 4.06 times less return on investment than Orchestra BioMed. But when comparing it to its historical volatility, Brunswick is 3.64 times less risky than Orchestra BioMed. It trades about 0.02 of its potential returns per unit of risk. Orchestra BioMed Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  992.00  in Orchestra BioMed Holdings on September 16, 2024 and sell it today you would lose (466.00) from holding Orchestra BioMed Holdings or give up 46.98% of portfolio value over 90 days.

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

Brunswick  vs.  Orchestra BioMed 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 latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Orchestra BioMed Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orchestra BioMed Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, Orchestra BioMed displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunswick and Orchestra BioMed

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

The idea behind Brunswick and Orchestra BioMed 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.