Correlation Between Winnebago Industries and Brunswick

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

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

Diversification Opportunities for Winnebago Industries and Brunswick

0.62

Correlation Coefficient

Winnebago Industries  Brunswick

Poor diversification

The 3 months correlation between Winnebago and Brunswick is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Winnebago Industries and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Winnebago Industries 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 Winnebago Industries 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 Winnebago Industries i.e., Winnebago Industries and Brunswick go up and down completely randomly.

Pair Corralation between Winnebago Industries and Brunswick

Considering the 90-day investment horizon Winnebago Industries is expected to generate 0.92 times more return on investment than Brunswick. However, Winnebago Industries is 1.09 times less risky than Brunswick. It trades about -0.35 of its potential returns per unit of risk. Brunswick is currently generating about -0.37 per unit of risk. If you would invest  7,249  in Winnebago Industries on January 30, 2024 and sell it today you would lose (942.00) from holding Winnebago Industries or give up 12.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Winnebago Industries  vs.  Brunswick

Winnebago Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winnebago Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Winnebago Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 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.

Pair Trading with Winnebago Industries and Brunswick

The main advantage of trading using opposite Winnebago Industries and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winnebago Industries 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 Winnebago Industries 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.