Correlation Between Bellring Brands and Grupo Bimbo

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

By analyzing existing cross correlation between Bellring Brands LLC and Grupo Bimbo SAB, you can compare the effects of market volatilities on Bellring Brands and Grupo Bimbo 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 Bellring Brands with a short position of Grupo Bimbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bellring Brands and Grupo Bimbo.

Diversification Opportunities for Bellring Brands and Grupo Bimbo

-0.1

Correlation Coefficient

Bellring Brands  Grupo Bimbo

Good diversification

The 3 months correlation between Bellring and Grupo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bellring Brands LLC and Grupo Bimbo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Bimbo SAB and Bellring Brands 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 Bellring Brands LLC are associated (or correlated) with Grupo Bimbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Bimbo SAB has no effect on the direction of Bellring Brands i.e., Bellring Brands and Grupo Bimbo go up and down completely randomly.

Pair Corralation between Bellring Brands and Grupo Bimbo

Given the investment horizon of 90 days Bellring Brands LLC is expected to generate 0.27 times more return on investment than Grupo Bimbo. However, Bellring Brands LLC is 3.76 times less risky than Grupo Bimbo. It trades about -0.25 of its potential returns per unit of risk. Grupo Bimbo SAB is currently generating about -0.18 per unit of risk. If you would invest  7,614  in Bellring Brands LLC on October 23, 2024 and sell it today you would lose (375.00) from holding Bellring Brands LLC or give up 4.93% of portfolio value over 90 days.

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

Bellring Brands LLC  vs.  Grupo Bimbo SAB

Bellring Brands LLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bellring Brands LLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, Bellring Brands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Grupo Bimbo SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bellring Brands and Grupo Bimbo

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

The idea behind Bellring Brands LLC and Grupo Bimbo SAB 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.