Correlation Between Procter Gamble and Bellring Brands

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

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

Diversification Opportunities for Procter Gamble and Bellring Brands

0.68

Correlation Coefficient

Procter Gamble  Bellring Brands

Poor diversification

The 3 months correlation between Procter and Bellring is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble 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 Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Bellring Brands go up and down completely randomly.

Pair Corralation between Procter Gamble and Bellring Brands

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.66 times more return on investment than Bellring Brands. However, Procter Gamble is 1.52 times less risky than Bellring Brands. It trades about -0.09 of its potential returns per unit of risk. Bellring Brands LLC is currently generating about -0.33 per unit of risk. If you would invest  16,095  in Procter Gamble on January 20, 2024 and sell it today you would lose (281.00) from holding Procter Gamble or give up 1.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Procter Gamble  vs.  Bellring Brands LLC

Procter Gamble

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Bellring Brands LLC

Risk-Adjusted Performance

0 of 100

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Procter Gamble and Bellring Brands

The main advantage of trading using opposite Procter Gamble and Bellring Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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 Procter Gamble 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.