Correlation Between Brown Brown and Crawford

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

By analyzing existing cross correlation between Brown Brown and Crawford Company, you can compare the effects of market volatilities on Brown Brown and Crawford 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 Brown Brown with a short position of Crawford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Brown and Crawford.

Diversification Opportunities for Brown Brown and Crawford

0.57

Correlation Coefficient

Brown Brown  Crawford

Very weak diversification

The 3 months correlation between Brown and Crawford is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Brown Brown and Crawford Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crawford and Brown Brown 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 Brown Brown are associated (or correlated) with Crawford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crawford has no effect on the direction of Brown Brown i.e., Brown Brown and Crawford go up and down completely randomly.

Pair Corralation between Brown Brown and Crawford

Considering the 90-day investment horizon Brown Brown is expected to generate 0.94 times more return on investment than Crawford. However, Brown Brown is 1.07 times less risky than Crawford. It trades about 0.27 of its potential returns per unit of risk. Crawford Company is currently generating about 0.14 per unit of risk. If you would invest  10,769  in Brown Brown on November 28, 2024 and sell it today you would earn a total of  707.00  from holding Brown Brown or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Brown Brown  vs.  Crawford Company

Brown Brown

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brown Brown are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brown Brown is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Crawford

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crawford Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Crawford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brown Brown and Crawford

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

The idea behind Brown Brown and Crawford Company 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.