Correlation Between Brunswick and Winnebago Industries

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

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

Diversification Opportunities for Brunswick and Winnebago Industries

0.94

Correlation Coefficient

Brunswick  Winnebago Industries

Almost no diversification

The 3 months correlation between Brunswick and Winnebago is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Winnebago Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winnebago Industries 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 Winnebago Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winnebago Industries has no effect on the direction of Brunswick i.e., Brunswick and Winnebago Industries go up and down completely randomly.

Pair Corralation between Brunswick and Winnebago Industries

Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.71 times more return on investment than Winnebago Industries. However, Brunswick is 1.42 times less risky than Winnebago Industries. It trades about -0.13 of its potential returns per unit of risk. Winnebago Industries is currently generating about -0.13 per unit of risk. If you would invest  6,406  in Brunswick on December 30, 2024 and sell it today you would lose (1,057) from holding Brunswick or give up 16.5% of portfolio value over 90 days.

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

Brunswick  vs.  Winnebago Industries

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.

Winnebago Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winnebago Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brunswick and Winnebago Industries

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

The idea behind Brunswick and Winnebago Industries 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.