Correlation Between Levi Strauss and Brunswick

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

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

Diversification Opportunities for Levi Strauss and Brunswick

-0.61

Correlation Coefficient

Levi Strauss  Brunswick

Excellent diversification

The 3 months correlation between Levi and Brunswick is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Levi Strauss 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 Levi Strauss Co 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 Levi Strauss i.e., Levi Strauss and Brunswick go up and down completely randomly.

Pair Corralation between Levi Strauss and Brunswick

Given the investment horizon of 90 days Levi Strauss Co is expected to generate 1.07 times more return on investment than Brunswick. However, Levi Strauss is 1.07 times more volatile than Brunswick. It trades about 0.11 of its potential returns per unit of risk. Brunswick is currently generating about 0.02 per unit of risk. If you would invest  1,327  in Levi Strauss Co on February 28, 2024 and sell it today you would earn a total of  887.00  from holding Levi Strauss Co or generate 66.84% return on investment over 90 days.

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

Levi Strauss Co  vs.  Brunswick

Levi Strauss

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Levi Strauss Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Levi Strauss demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Levi Strauss and Brunswick

The main advantage of trading using opposite Levi Strauss and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Levi Strauss 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 Levi Strauss Co 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.