Correlation Between Polaris Industries and Brunswick Corp

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

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

Diversification Opportunities for Polaris Industries and Brunswick Corp

0.27

Correlation Coefficient

Polaris Industries  Brunswick Corp

Modest diversification

The 3 months correlation between Polaris and Brunswick is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Industries and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp and Polaris Industries 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 Polaris Industries 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 Polaris Industries i.e., Polaris Industries and Brunswick Corp go up and down completely randomly.

Pair Corralation between Polaris Industries and Brunswick Corp

Considering the 90-day investment horizon Polaris Industries is expected to under-perform the Brunswick Corp. In addition to that, Polaris Industries is 3.87 times more volatile than Brunswick Corp. It trades about -0.11 of its total potential returns per unit of risk. Brunswick Corp is currently generating about 0.08 per unit of volatility. If you would invest  2,421  in Brunswick Corp on September 2, 2024 and sell it today you would earn a total of  76.00  from holding Brunswick Corp or generate 3.14% return on investment over 90 days.

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

Polaris Industries  vs.  Brunswick Corp

Polaris Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polaris Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Brunswick Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick Corp are ranked lower than 6 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Polaris Industries and Brunswick Corp

The main advantage of trading using opposite Polaris Industries and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Industries 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 Polaris Industries 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..