Correlation Between Brunswick and Arcimoto

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

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

Diversification Opportunities for Brunswick and Arcimoto

-0.14

Correlation Coefficient

Brunswick  Arcimoto

Good diversification

The 3 months correlation between Brunswick and Arcimoto is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Arcimoto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcimoto 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 Arcimoto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcimoto has no effect on the direction of Brunswick i.e., Brunswick and Arcimoto go up and down completely randomly.

Pair Corralation between Brunswick and Arcimoto

Allowing for the 90-day total investment horizon Brunswick is expected to generate 0.81 times more return on investment than Arcimoto. However, Brunswick is 1.23 times less risky than Arcimoto. It trades about -0.32 of its potential returns per unit of risk. Arcimoto is currently generating about -0.43 per unit of risk. If you would invest  9,418  in Brunswick on February 3, 2024 and sell it today you would lose (1,303) from holding Brunswick or give up 13.84% of portfolio value over 90 days.

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

Brunswick  vs.  Arcimoto

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Arcimoto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcimoto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Brunswick and Arcimoto

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

The idea behind Brunswick and Arcimoto 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.