Correlation Between BellRock Brands and Haleon Plc

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

By analyzing existing cross correlation between BellRock Brands and Haleon plc, you can compare the effects of market volatilities on BellRock Brands and Haleon Plc 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 Haleon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of BellRock Brands and Haleon Plc.

Diversification Opportunities for BellRock Brands and Haleon Plc

0.0

Correlation Coefficient

BellRock Brands  Haleon Plc

Pay attention - limited upside

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

Pair Corralation between BellRock Brands and Haleon Plc

Assuming the 90 days horizon BellRock Brands is expected to under-perform the Haleon Plc. In addition to that, BellRock Brands is 6.55 times more volatile than Haleon plc. It trades about -0.12 of its total potential returns per unit of risk. Haleon plc is currently generating about -0.05 per unit of volatility. If you would invest  524.00  in Haleon plc on September 13, 2024 and sell it today you would lose (38.00) from holding Haleon plc or give up 7.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BellRock Brands  vs.  Haleon plc

BellRock Brands

Risk-Adjusted Performance

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Very Weak

Over the last 90 days BellRock Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Haleon plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BellRock Brands and Haleon Plc

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

The idea behind BellRock Brands and Haleon plc 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.