Correlation Between Brunswick and Vince Holding

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

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

Diversification Opportunities for Brunswick and Vince Holding

-0.42

Correlation Coefficient

Brunswick  Vince Holding

Very good diversification

The 3 months correlation between Brunswick and Vince is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Vince Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vince Holding Corp 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 Vince Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vince Holding Corp has no effect on the direction of Brunswick i.e., Brunswick and Vince Holding go up and down completely randomly.

Pair Corralation between Brunswick and Vince Holding

Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the Vince Holding. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 11.37 times less risky than Vince Holding. The stock trades about -0.5 of its potential returns per unit of risk. The Vince Holding Corp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  170.00  in Vince Holding Corp on September 23, 2024 and sell it today you would earn a total of  312.00  from holding Vince Holding Corp or generate 183.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brunswick  vs.  Vince Holding Corp

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 uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Vince Holding Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vince Holding Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Vince Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunswick and Vince Holding

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

The idea behind Brunswick and Vince Holding Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.