Correlation Between BellRock Brands and Benchmark Botanics
Can any of the company-specific risk be diversified away by investing in both BellRock Brands and Benchmark Botanics 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 Benchmark Botanics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BellRock Brands and Benchmark Botanics, you can compare the effects of market volatilities on BellRock Brands and Benchmark Botanics 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 Benchmark Botanics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BellRock Brands and Benchmark Botanics.
Diversification Opportunities for BellRock Brands and Benchmark Botanics
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BellRock and Benchmark is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding BellRock Brands and Benchmark Botanics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Botanics 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 Benchmark Botanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Botanics has no effect on the direction of BellRock Brands i.e., BellRock Brands and Benchmark Botanics go up and down completely randomly.
Pair Corralation between BellRock Brands and Benchmark Botanics
Assuming the 90 days horizon BellRock Brands is expected to generate 3.81 times more return on investment than Benchmark Botanics. However, BellRock Brands is 3.81 times more volatile than Benchmark Botanics. It trades about 0.09 of its potential returns per unit of risk. Benchmark Botanics is currently generating about 0.04 per unit of risk. If you would invest 0.00 in BellRock Brands on September 4, 2024 and sell it today you would earn a total of 0.00 from holding BellRock Brands or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BellRock Brands vs. Benchmark Botanics
Performance |
| Timeline |
| BellRock Brands |
| Benchmark Botanics |
BellRock Brands and Benchmark Botanics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BellRock Brands and Benchmark Botanics
The main advantage of trading using opposite BellRock Brands and Benchmark Botanics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BellRock Brands position performs unexpectedly, Benchmark Botanics 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 Benchmark Botanics will offset losses from the drop in Benchmark Botanics' long position.| BellRock Brands vs. Cann American Corp | BellRock Brands vs. Speakeasy Cannabis Club | BellRock Brands vs. Benchmark Botanics | BellRock Brands vs. Link Reservations |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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