Correlation Between Post Holdings and Bellring Brands

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

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

Diversification Opportunities for Post Holdings and Bellring Brands

-0.38

Correlation Coefficient

Post Holdings  Bellring Brands

Very good diversification

The 3 months correlation between Post and Bellring is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Post Holdings and Bellring Brands LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellring Brands LLC and Post Holdings 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 Post Holdings are associated (or correlated) with Bellring Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellring Brands LLC has no effect on the direction of Post Holdings i.e., Post Holdings and Bellring Brands go up and down completely randomly.

Pair Corralation between Post Holdings and Bellring Brands

Given the investment horizon of 90 days Post Holdings is expected to generate 0.65 times more return on investment than Bellring Brands. However, Post Holdings is 1.54 times less risky than Bellring Brands. It trades about 0.07 of its potential returns per unit of risk. Bellring Brands LLC is currently generating about -0.01 per unit of risk. If you would invest  10,757  in Post Holdings on January 8, 2025 and sell it today you would earn a total of  662.00  from holding Post Holdings or generate 6.15% return on investment over 90 days.

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

Post Holdings  vs.  Bellring Brands LLC

Post Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Post Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Post Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Bellring Brands LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bellring Brands LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Bellring Brands is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Post Holdings and Bellring Brands

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

The idea behind Post Holdings and Bellring Brands LLC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.