Correlation Between Bellring Brands and LAMB

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

Diversification Opportunities for Bellring Brands and LAMB

0.51

Correlation Coefficient

Bellring Brands  LAMB

Very weak diversification

The 3 months correlation between Bellring and LAMB is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bellring Brands LLC and LAMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAMB 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 LAMB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAMB has no effect on the direction of Bellring Brands i.e., Bellring Brands and LAMB go up and down completely randomly.

Pair Corralation between Bellring Brands and LAMB

Given the investment horizon of 90 days Bellring Brands LLC is expected to under-perform the LAMB. But the stock apears to be less risky and, when comparing its historical volatility, Bellring Brands LLC is 59.79 times less risky than LAMB. The stock trades about 0.0 of its potential returns per unit of risk. The LAMB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.28  in LAMB on December 30, 2024 and sell it today you would lose (0.08) from holding LAMB or give up 27.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Bellring Brands LLC  vs.  LAMB

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 relatively invariable fundamental drivers, Bellring Brands is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

LAMB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LAMB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, LAMB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bellring Brands and LAMB

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

The idea behind Bellring Brands LLC and LAMB 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.