Correlation Between Brunswick and Micromobility

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

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

Diversification Opportunities for Brunswick and Micromobility

0.46

Correlation Coefficient

Brunswick  Micromobility

Very weak diversification

The 3 months correlation between Brunswick and Micromobility is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Micromobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micromobility 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 Micromobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micromobility has no effect on the direction of Brunswick i.e., Brunswick and Micromobility go up and down completely randomly.

Pair Corralation between Brunswick and Micromobility

Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.15 times more return on investment than Micromobility. However, Brunswick is 6.67 times less risky than Micromobility. It trades about 0.0 of its potential returns per unit of risk. Micromobility is currently generating about -0.17 per unit of risk. If you would invest  7,397  in Brunswick on September 29, 2024 and sell it today you would lose (927.00) from holding Brunswick or give up 12.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	27.42%
Values	Daily Returns

Brunswick  vs.  Micromobility

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 uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Micromobility

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brunswick and Micromobility

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

The idea behind Brunswick and Micromobility 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.