Correlation Between BellRock Brands and Decibel Cannabis

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

By analyzing existing cross correlation between BellRock Brands and Decibel Cannabis, you can compare the effects of market volatilities on BellRock Brands and Decibel Cannabis 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 Decibel Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of BellRock Brands and Decibel Cannabis.

Diversification Opportunities for BellRock Brands and Decibel Cannabis

0.0

Correlation Coefficient

BellRock Brands  Decibel Cannabis

Pay attention - limited upside

The 3 months correlation between BellRock and Decibel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BellRock Brands and Decibel Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decibel Cannabis 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 Decibel Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decibel Cannabis has no effect on the direction of BellRock Brands i.e., BellRock Brands and Decibel Cannabis go up and down completely randomly.

Pair Corralation between BellRock Brands and Decibel Cannabis

Assuming the 90 days horizon BellRock Brands is expected to under-perform the Decibel Cannabis. In addition to that, BellRock Brands is 3.8 times more volatile than Decibel Cannabis. It trades about -0.22 of its total potential returns per unit of risk. Decibel Cannabis is currently generating about -0.11 per unit of volatility. If you would invest  5.35  in Decibel Cannabis on September 15, 2024 and sell it today you would lose (0.82) from holding Decibel Cannabis or give up 15.33% of portfolio value over 90 days.

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

BellRock Brands  vs.  Decibel Cannabis

BellRock Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BellRock Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Decibel Cannabis

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Decibel Cannabis are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Decibel Cannabis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BellRock Brands and Decibel Cannabis

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

The idea behind BellRock Brands and Decibel Cannabis 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.