Correlation Between Hasbro and Brunswick

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

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

Diversification Opportunities for Hasbro and Brunswick

0.57

Correlation Coefficient

Hasbro  Brunswick

Very weak diversification

The 3 months correlation between Hasbro and Brunswick is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and Hasbro 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 Hasbro Inc 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 Hasbro i.e., Hasbro and Brunswick go up and down completely randomly.

Pair Corralation between Hasbro and Brunswick

Considering the 90-day investment horizon Hasbro is expected to generate 1.15 times less return on investment than Brunswick. But when comparing it to its historical volatility, Hasbro Inc is 1.01 times less risky than Brunswick. It trades about 0.03 of its potential returns per unit of risk. Brunswick is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,794  in Brunswick on August 11, 2024 and sell it today you would earn a total of  1,591  from holding Brunswick or generate 23.42% return on investment over 90 days.

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

Hasbro Inc  vs.  Brunswick

Hasbro Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hasbro Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hasbro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Brunswick

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Brunswick exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hasbro and Brunswick

The main advantage of trading using opposite Hasbro and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro 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 Hasbro Inc 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.