Correlation Between Ultra Clean and Brunswick

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

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

Diversification Opportunities for Ultra Clean and Brunswick

0.26

Correlation Coefficient

Ultra Clean  Brunswick

Modest diversification

The 3 months correlation between Ultra and Brunswick is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Ultra Clean 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 Ultra Clean Holdings 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 Ultra Clean i.e., Ultra Clean and Brunswick go up and down completely randomly.

Pair Corralation between Ultra Clean and Brunswick

Given the investment horizon of 90 days Ultra Clean Holdings is expected to generate 1.37 times more return on investment than Brunswick. However, Ultra Clean is 1.37 times more volatile than Brunswick. It trades about 0.04 of its potential returns per unit of risk. Brunswick is currently generating about -0.01 per unit of risk. If you would invest  2,977  in Ultra Clean Holdings on October 4, 2024 and sell it today you would earn a total of  687.00  from holding Ultra Clean Holdings or generate 23.08% return on investment over 90 days.

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

Ultra Clean Holdings  vs.  Brunswick

Ultra Clean Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultra Clean Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ultra Clean is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private 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 inconsistent 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 Ultra Clean and Brunswick

The main advantage of trading using opposite Ultra Clean and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean 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 Ultra Clean Holdings 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.