Correlation Between Bellring Brands and WH Group

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

Diversification Opportunities for Bellring Brands and WH Group

0.0

Correlation Coefficient

Bellring Brands  WH Group

Pay attention - limited upside

The 3 months correlation between Bellring and WHGRF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bellring Brands LLC and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of Bellring Brands i.e., Bellring Brands and WH Group go up and down completely randomly.

Pair Corralation between Bellring Brands and WH Group

Given the investment horizon of 90 days Bellring Brands is expected to generate 36.7 times less return on investment than WH Group. But when comparing it to its historical volatility, Bellring Brands LLC is 31.15 times less risky than WH Group. It trades about 0.13 of its potential returns per unit of risk. WH Group Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  63.00  in WH Group Limited on October 9, 2024 and sell it today you would earn a total of  18.00  from holding WH Group Limited or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	65.73%
Values	Daily Returns

Bellring Brands LLC  vs.  WH Group Limited

Bellring Brands LLC

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bellring Brands LLC are ranked lower than 15 (%) 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.

WH Group Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WH Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bellring Brands and WH Group

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

The idea behind Bellring Brands LLC and WH Group Limited 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 CEOs Directory module to screen CEOs from public companies around the world.