Correlation Between Bellring Brands and JBS SA

Can any of the company-specific risk be diversified away by investing in both Bellring Brands and JBS SA 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 JBS SA 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 JBS SA, you can compare the effects of market volatilities on Bellring Brands and JBS SA 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 JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bellring Brands and JBS SA.

Diversification Opportunities for Bellring Brands and JBS SA

0.2

Correlation Coefficient

Bellring Brands  JBS SA

Modest diversification

The 3 months correlation between Bellring and JBS is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bellring Brands LLC and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Bellring Brands i.e., Bellring Brands and JBS SA go up and down completely randomly.

Pair Corralation between Bellring Brands and JBS SA

Given the investment horizon of 90 days Bellring Brands LLC is expected to under-perform the JBS SA. But the stock apears to be less risky and, when comparing its historical volatility, Bellring Brands LLC is 2.05 times less risky than JBS SA. The stock trades about -0.05 of its potential returns per unit of risk. The JBS SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,313  in JBS SA on December 20, 2024 and sell it today you would earn a total of  76.00  from holding JBS SA or generate 5.79% return on investment over 90 days.

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

Bellring Brands LLC  vs.  JBS SA

Bellring Brands LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bellring Brands LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

JBS SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, JBS SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bellring Brands and JBS SA

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

The idea behind Bellring Brands LLC and JBS SA 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.