Correlation Between Clarus Corp and Brunswick
Can any of the company-specific risk be diversified away by investing in both Clarus Corp 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 Clarus Corp and Brunswick into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clarus Corp and Brunswick, you can compare the effects of market volatilities on Clarus Corp 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 Clarus Corp with a short position of Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clarus Corp and Brunswick.
Diversification Opportunities for Clarus Corp and Brunswick
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clarus and Brunswick is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Clarus Corp and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Clarus 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 Clarus Corp 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 Clarus Corp i.e., Clarus Corp and Brunswick go up and down completely randomly.
Pair Corralation between Clarus Corp and Brunswick
Given the investment horizon of 90 days Clarus Corp is expected to under-perform the Brunswick. In addition to that, Clarus Corp is 1.74 times more volatile than Brunswick. It trades about -0.05 of its total potential returns per unit of risk. Brunswick is currently generating about 0.02 per unit of volatility. If you would invest 7,987 in Brunswick on January 24, 2024 and sell it today you would earn a total of 505.00 from holding Brunswick or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Clarus Corp vs. Brunswick
Performance |
| Timeline |
| Clarus Corp |
| Brunswick |
Clarus Corp and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clarus Corp and Brunswick
The main advantage of trading using opposite Clarus Corp and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clarus Corp 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 Clarus Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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