Correlation Between BRP and Brunswick Corp

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

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

Diversification Opportunities for BRP and Brunswick Corp

-0.31

Correlation Coefficient

BRP  Brunswick Corp

Very good diversification

The 3 months correlation between BRP and Brunswick is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp and BRP 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 BRP Inc are associated (or correlated) with Brunswick Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Corp has no effect on the direction of BRP i.e., BRP and Brunswick Corp go up and down completely randomly.

Pair Corralation between BRP and Brunswick Corp

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Brunswick Corp. In addition to that, BRP is 5.16 times more volatile than Brunswick Corp. It trades about -0.18 of its total potential returns per unit of risk. Brunswick Corp is currently generating about 0.02 per unit of volatility. If you would invest  2,428  in Brunswick Corp on December 29, 2024 and sell it today you would earn a total of  15.00  from holding Brunswick Corp or generate 0.62% return on investment over 90 days.

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

BRP Inc  vs.  Brunswick Corp

BRP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

Brunswick Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brunswick Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BRP and Brunswick Corp

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

The idea behind BRP Inc and Brunswick 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.