Correlation Between BellRock Brands and American Green

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

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

Diversification Opportunities for BellRock Brands and American Green

0.0

Correlation Coefficient

BellRock Brands  American Green

Pay attention - limited upside

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

Pair Corralation between BellRock Brands and American Green

If you would invest  0.05  in American Green on December 30, 2024 and sell it today you would lose (0.02) from holding American Green or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

BellRock Brands  vs.  American Green

BellRock Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days BellRock Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BellRock Brands is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

American Green

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Green are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, American Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BellRock Brands and American Green

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

The idea behind BellRock Brands and American Green 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.