Correlation Between BellRock Brands and Stem Holdings

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

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

Diversification Opportunities for BellRock Brands and Stem Holdings

0.0

Correlation Coefficient

BellRock Brands  Stem Holdings

Pay attention - limited upside

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

Pair Corralation between BellRock Brands and Stem Holdings

If you would invest  0.00  in Stem Holdings on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Stem Holdings or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

BellRock Brands  vs.  Stem Holdings

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.

Stem Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stem Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile primary indicators, Stem Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BellRock Brands and Stem Holdings

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

The idea behind BellRock Brands and Stem Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.