Correlation Between Clarus Corp and Brunswick Corp

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

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

Diversification Opportunities for Clarus Corp and Brunswick Corp

0.48
  Correlation Coefficient
Clarus Corp
Brunswick Corp

Very weak diversification

The 3 months correlation between Clarus and Brunswick is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Clarus Corp and Brunswick Corp in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp 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 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 Clarus Corp i.e., Clarus Corp and Brunswick Corp go up and down completely randomly.

Pair Corralation between Clarus Corp and Brunswick Corp

Given the investment horizon of 90 days Clarus Corp is expected to generate 0.94 times more return on investment than Brunswick Corp. However, Clarus Corp is 1.06 times less risky than Brunswick Corp. It trades about 0.12 of its potential returns per unit of risk. Brunswick Corp is currently generating about 0.09 per unit of risk. If you would invest  1,489  in Clarus Corp on June 30, 2021 and sell it today you would earn a total of  1,176  from holding Clarus Corp or generate 78.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Clarus Corp  vs.  Brunswick Corp

 Performance (%) 
      Timeline 
Clarus Corp 
 Clarus Performance
0 of 100
Over the last 90 days Clarus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Clarus Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Brunswick Corp 
 Brunswick Performance
0 of 100
Over the last 90 days Brunswick Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Brunswick Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Clarus Corp and Brunswick Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Clarus Corp and Brunswick Corp

The main advantage of trading using opposite Clarus Corp and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clarus Corp 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 Clarus Corp 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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