Correlation Between Bellring Brands and Park Hotels

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

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

Diversification Opportunities for Bellring Brands and Park Hotels

0.5

Correlation Coefficient

Bellring Brands  Park Hotels

Very weak diversification

The 3 months correlation between Bellring and Park is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bellring Brands LLC and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and Bellring 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 Bellring Brands LLC are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Bellring Brands i.e., Bellring Brands and Park Hotels go up and down completely randomly.

Pair Corralation between Bellring Brands and Park Hotels

Given the investment horizon of 90 days Bellring Brands LLC is expected to generate 0.63 times more return on investment than Park Hotels. However, Bellring Brands LLC is 1.59 times less risky than Park Hotels. It trades about 0.47 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.04 per unit of risk. If you would invest  5,556  in Bellring Brands LLC on September 2, 2024 and sell it today you would earn a total of  2,290  from holding Bellring Brands LLC or generate 41.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.97%
Values	Daily Returns

Bellring Brands LLC  vs.  Park Hotels Resorts

Bellring Brands LLC

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bellring Brands LLC are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, Bellring Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Park Hotels Resorts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Park Hotels is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bellring Brands and Park Hotels

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

The idea behind Bellring Brands LLC and Park Hotels Resorts 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.