Correlation Between Packaging Corp and Brunswick Corp

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

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

Diversification Opportunities for Packaging Corp and Brunswick Corp

-0.67

Correlation Coefficient

Packaging Corp  Brunswick Corp

Excellent diversification

The 3 months correlation between Packaging and Brunswick is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Packaging Corp of and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp and Packaging Corp 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 Packaging Corp of 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 Packaging Corp i.e., Packaging Corp and Brunswick Corp go up and down completely randomly.

Pair Corralation between Packaging Corp and Brunswick Corp

Considering the 90-day investment horizon Packaging Corp of is expected to under-perform the Brunswick Corp. In addition to that, Packaging Corp is 1.11 times more volatile than Brunswick Corp. It trades about -0.43 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	Weak
Accuracy	95.45%
Values	Daily Returns

Packaging Corp of  vs.  Brunswick Corp

Packaging Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging Corp of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Packaging Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Packaging Corp and Brunswick Corp

The main advantage of trading using opposite Packaging Corp and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packaging Corp 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 Packaging Corp of 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.