Correlation Between Brunswick and Sealed Air

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

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

Diversification Opportunities for Brunswick and Sealed Air

0.88

Correlation Coefficient

Brunswick  Sealed Air

Very poor diversification

The 3 months correlation between Brunswick and Sealed is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Brunswick i.e., Brunswick and Sealed Air go up and down completely randomly.

Pair Corralation between Brunswick and Sealed Air

Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the Sealed Air. In addition to that, Brunswick is 1.06 times more volatile than Sealed Air. It trades about -0.26 of its total potential returns per unit of risk. Sealed Air is currently generating about -0.12 per unit of volatility. If you would invest  3,710  in Sealed Air on December 4, 2024 and sell it today you would lose (451.00) from holding Sealed Air or give up 12.16% of portfolio value over 90 days.

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

Brunswick  vs.  Sealed Air

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.

Sealed Air

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sealed Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and 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.

Pair Trading with Brunswick and Sealed Air

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

The idea behind Brunswick and Sealed Air 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 Global Correlations module to find global opportunities by holding instruments from different markets.