Correlation Between BellRock Brands and Levitee Labs

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

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

Diversification Opportunities for BellRock Brands and Levitee Labs

1.0

Correlation Coefficient

BellRock Brands  Levitee Labs

No risk reduction

The 3 months correlation between BellRock and Levitee is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding BellRock Brands and Levitee Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levitee Labs 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 Levitee Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levitee Labs has no effect on the direction of BellRock Brands i.e., BellRock Brands and Levitee Labs go up and down completely randomly.

Pair Corralation between BellRock Brands and Levitee Labs

If you would invest  0.27  in Levitee Labs on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Levitee Labs or generate 0.0% return on investment over 90 days.

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

BellRock Brands  vs.  Levitee Labs

BellRock Brands

Risk-Adjusted Performance

0 of 100

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.

Levitee Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levitee Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Levitee Labs 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 Levitee Labs

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

The idea behind BellRock Brands and Levitee Labs 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.