Correlation Between Gentex and Brunswick

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

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

Diversification Opportunities for Gentex and Brunswick

0.38

Correlation Coefficient

Gentex  Brunswick

Weak diversification

The 3 months correlation between Gentex and Brunswick is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Gentex 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 Gentex are associated (or correlated) with Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of Gentex i.e., Gentex and Brunswick go up and down completely randomly.

Pair Corralation between Gentex and Brunswick

Given the investment horizon of 90 days Gentex is expected to under-perform the Brunswick. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 1.56 times less risky than Brunswick. The stock trades about -0.02 of its potential returns per unit of risk. The Brunswick is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  7,389  in Brunswick on October 5, 2024 and sell it today you would lose (939.00) from holding Brunswick or give up 12.71% of portfolio value over 90 days.

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

Gentex  vs.  Brunswick

Gentex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Gentex is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gentex and Brunswick

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

The idea behind Gentex and Brunswick 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.