Correlation Between Brunswick and Seaport Entertainment

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

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

Diversification Opportunities for Brunswick and Seaport Entertainment

0.07

Correlation Coefficient

Brunswick  Seaport Entertainment

Significant diversification

The 3 months correlation between Brunswick and Seaport is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Seaport Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaport Entertainment 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 Seaport Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaport Entertainment has no effect on the direction of Brunswick i.e., Brunswick and Seaport Entertainment go up and down completely randomly.

Pair Corralation between Brunswick and Seaport Entertainment

Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the Seaport Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 2.22 times less risky than Seaport Entertainment. The stock trades about -0.05 of its potential returns per unit of risk. The Seaport Entertainment Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,113  in Seaport Entertainment Group on September 14, 2024 and sell it today you would lose (298.00) from holding Seaport Entertainment Group or give up 9.57% of portfolio value over 90 days.

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

Brunswick  vs.  Seaport Entertainment Group

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.

Seaport Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seaport Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Seaport Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Brunswick and Seaport Entertainment

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

The idea behind Brunswick and Seaport Entertainment Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.