Correlation Between Primo Brands and BrightSpring Health

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

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

Diversification Opportunities for Primo Brands and BrightSpring Health

0.51

Correlation Coefficient

Primo Brands  BrightSpring Health

Very weak diversification

The 3 months correlation between Primo and BrightSpring is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and BrightSpring Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightSpring Health and Primo 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 Primo Brands are associated (or correlated) with BrightSpring Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightSpring Health has no effect on the direction of Primo Brands i.e., Primo Brands and BrightSpring Health go up and down completely randomly.

Pair Corralation between Primo Brands and BrightSpring Health

Given the investment horizon of 90 days Primo Brands is expected to generate 0.6 times more return on investment than BrightSpring Health. However, Primo Brands is 1.67 times less risky than BrightSpring Health. It trades about 0.0 of its potential returns per unit of risk. BrightSpring Health Services, is currently generating about -0.03 per unit of risk. If you would invest  3,110  in Primo Brands on October 8, 2024 and sell it today you would lose (3.00) from holding Primo Brands or give up 0.1% of portfolio value over 90 days.

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

Primo Brands  vs.  BrightSpring Health Services,

Primo Brands

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

BrightSpring Health

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrightSpring Health Services, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, BrightSpring Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primo Brands and BrightSpring Health

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

The idea behind Primo Brands and BrightSpring Health Services, 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.