Correlation Between Brunswick and Superior Uniform

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

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

Diversification Opportunities for Brunswick and Superior Uniform

0.55

Correlation Coefficient

Brunswick  Superior Uniform

Very weak diversification

The 3 months correlation between Brunswick and Superior is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Superior Uniform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Uniform and Brunswick 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 Brunswick are associated (or correlated) with Superior Uniform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Uniform has no effect on the direction of Brunswick i.e., Brunswick and Superior Uniform go up and down completely randomly.

Pair Corralation between Brunswick and Superior Uniform

Allowing for the 90-day total investment horizon Brunswick is expected to generate 1.81 times less return on investment than Superior Uniform. But when comparing it to its historical volatility, Brunswick is 1.41 times less risky than Superior Uniform. It trades about 0.02 of its potential returns per unit of risk. Superior Uniform Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,397  in Superior Uniform Group on January 26, 2024 and sell it today you would earn a total of  287.00  from holding Superior Uniform Group or generate 20.54% return on investment over 90 days.

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

Brunswick  vs.  Superior Uniform Group

Brunswick

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Brunswick is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Superior Uniform

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Uniform Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Superior Uniform exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunswick and Superior Uniform

The main advantage of trading using opposite Brunswick and Superior Uniform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, Superior Uniform 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 Superior Uniform will offset losses from the drop in Superior Uniform's long position.

The idea behind Brunswick and Superior Uniform Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.