Correlation Between Johnson Outdoors and Brunswick

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

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

Diversification Opportunities for Johnson Outdoors and Brunswick

-0.24

Correlation Coefficient

Johnson Outdoors  Brunswick

Very good diversification

The 3 months correlation between Johnson and Brunswick is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Outdoors and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Johnson Outdoors 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 Johnson Outdoors 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 Johnson Outdoors i.e., Johnson Outdoors and Brunswick go up and down completely randomly.

Pair Corralation between Johnson Outdoors and Brunswick

Given the investment horizon of 90 days Johnson Outdoors is expected to under-perform the Brunswick. In addition to that, Johnson Outdoors is 1.03 times more volatile than Brunswick. It trades about -0.03 of its total potential returns per unit of risk. Brunswick is currently generating about 0.03 per unit of volatility. If you would invest  7,169  in Brunswick on January 17, 2024 and sell it today you would earn a total of  1,379  from holding Brunswick or generate 19.24% return on investment over 90 days.

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

Johnson Outdoors  vs.  Brunswick

Johnson Outdoors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Brunswick

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick are ranked lower than 1 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Johnson Outdoors and Brunswick

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

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.