Correlation Between Movado and Brunswick

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

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

Diversification Opportunities for Movado and Brunswick

-0.52

Correlation Coefficient

Movado  Brunswick

Excellent diversification

The 3 months correlation between Movado and Brunswick is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Movado 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 Movado Group 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 Movado i.e., Movado and Brunswick go up and down completely randomly.

Pair Corralation between Movado and Brunswick

Considering the 90-day investment horizon Movado Group is expected to under-perform the Brunswick. In addition to that, Movado is 1.02 times more volatile than Brunswick. It trades about -0.04 of its total potential returns per unit of risk. Brunswick is currently generating about -0.02 per unit of volatility. If you would invest  7,006  in Brunswick on September 29, 2024 and sell it today you would lose (536.00) from holding Brunswick or give up 7.65% of portfolio value over 90 days.

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

Movado Group  vs.  Brunswick

Movado Group

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Movado Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Movado may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Movado and Brunswick

The main advantage of trading using opposite Movado and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movado 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 Movado Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.