Correlation Between Vista Outdoor and Brunswick Corp

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

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

Diversification Opportunities for Vista Outdoor and Brunswick Corp

-0.58

Correlation Coefficient

Vista Outdoor  Brunswick Corp

Excellent diversification

The 3 months correlation between Vista and Brunswick is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vista Outdoor and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp and Vista Outdoor 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 Vista Outdoor 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 Vista Outdoor i.e., Vista Outdoor and Brunswick Corp go up and down completely randomly.

Pair Corralation between Vista Outdoor and Brunswick Corp

If you would invest  2,369  in Brunswick Corp on October 15, 2024 and sell it today you would earn a total of  41.00  from holding Brunswick Corp or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

Vista Outdoor  vs.  Brunswick Corp

Vista Outdoor

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Vista Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vista Outdoor is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vista Outdoor and Brunswick Corp

The main advantage of trading using opposite Vista Outdoor and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Outdoor 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 Vista Outdoor 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.