Correlation Between Bellring Brands and Stellus Capital

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

Diversification Opportunities for Bellring Brands and Stellus Capital

0.61

Correlation Coefficient

Bellring Brands  Stellus Capital

Poor diversification

The 3 months correlation between Bellring and Stellus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bellring Brands LLC and Stellus Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellus Capital Inve 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 Stellus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellus Capital Inve has no effect on the direction of Bellring Brands i.e., Bellring Brands and Stellus Capital go up and down completely randomly.

Pair Corralation between Bellring Brands and Stellus Capital

Given the investment horizon of 90 days Bellring Brands LLC is expected to generate 1.59 times more return on investment than Stellus Capital. However, Bellring Brands is 1.59 times more volatile than Stellus Capital Investment. It trades about 0.47 of its potential returns per unit of risk. Stellus Capital Investment is currently generating about 0.08 per unit of risk. If you would invest  5,556  in Bellring Brands LLC on September 2, 2024 and sell it today you would earn a total of  2,290  from holding Bellring Brands LLC or generate 41.22% return on investment over 90 days.

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

Bellring Brands LLC  vs.  Stellus Capital Investment

Bellring Brands LLC

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bellring Brands LLC are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, Bellring Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Stellus Capital Inve

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stellus Capital Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Stellus Capital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bellring Brands and Stellus Capital

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

The idea behind Bellring Brands LLC and Stellus Capital Investment 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.