Correlation Between Brunswick and CONSOLIDATED

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

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

Diversification Opportunities for Brunswick and CONSOLIDATED

0.17

Correlation Coefficient

Brunswick  CONSOLIDATED

Average diversification

The 3 months correlation between Brunswick and CONSOLIDATED is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of Brunswick i.e., Brunswick and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Brunswick and CONSOLIDATED

Allowing for the 90-day total investment horizon Brunswick is expected to generate 1.54 times more return on investment than CONSOLIDATED. However, Brunswick is 1.54 times more volatile than CONSOLIDATED EDISON N. It trades about -0.05 of its potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about -0.21 per unit of risk. If you would invest  7,975  in Brunswick on September 15, 2024 and sell it today you would lose (616.00) from holding Brunswick or give up 7.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.56%
Values	Daily Returns

Brunswick  vs.  CONSOLIDATED EDISON N

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.

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for CONSOLIDATED EDISON N investors.

Pair Trading with Brunswick and CONSOLIDATED

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

The idea behind Brunswick and CONSOLIDATED EDISON N 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.

Check out your portfolio center.

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.