Correlation Between Greif Bros and Brunswick Corp

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

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

Diversification Opportunities for Greif Bros and Brunswick Corp

-0.42

Correlation Coefficient

Greif Bros  Brunswick Corp

Very good diversification

The 3 months correlation between Greif and Brunswick is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Greif Bros and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp and Greif Bros 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 Greif Bros 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 Greif Bros i.e., Greif Bros and Brunswick Corp go up and down completely randomly.

Pair Corralation between Greif Bros and Brunswick Corp

Considering the 90-day investment horizon Greif Bros is expected to under-perform the Brunswick Corp. In addition to that, Greif Bros is 2.02 times more volatile than Brunswick Corp. It trades about -0.46 of its total potential returns per unit of risk. Brunswick Corp is currently generating about -0.05 per unit of volatility. If you would invest  2,444  in Brunswick Corp on September 27, 2024 and sell it today you would lose (20.00) from holding Brunswick Corp or give up 0.82% of portfolio value over 90 days.

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

Greif Bros  vs.  Brunswick Corp

Greif Bros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greif Bros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greif Bros is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Brunswick Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Brunswick Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Greif Bros and Brunswick Corp

The main advantage of trading using opposite Greif Bros and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greif Bros 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 Greif Bros 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.