Correlation Between Brunswick and EZGO Technologies

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

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

Diversification Opportunities for Brunswick and EZGO Technologies

-0.39

Correlation Coefficient

Brunswick  EZGO Technologies

Very good diversification

The 3 months correlation between Brunswick and EZGO is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and EZGO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZGO Technologies 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 EZGO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZGO Technologies has no effect on the direction of Brunswick i.e., Brunswick and EZGO Technologies go up and down completely randomly.

Pair Corralation between Brunswick and EZGO Technologies

Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.36 times more return on investment than EZGO Technologies. However, Brunswick is 2.77 times less risky than EZGO Technologies. It trades about 0.03 of its potential returns per unit of risk. EZGO Technologies is currently generating about -0.09 per unit of risk. If you would invest  7,863  in Brunswick on August 30, 2024 and sell it today you would earn a total of  199.00  from holding Brunswick or generate 2.53% return on investment over 90 days.

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

Brunswick  vs.  EZGO Technologies

Brunswick

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick are ranked lower than 2 (%) 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.

EZGO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZGO Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brunswick and EZGO Technologies

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

The idea behind Brunswick and EZGO Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.