Correlation Between Nu Skin and Bellring Brands

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

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

Diversification Opportunities for Nu Skin and Bellring Brands

0.45

Correlation Coefficient

Nu Skin  Bellring Brands

Very weak diversification

The 3 months correlation between NUS and Bellring is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nu Skin Enterprises 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 Nu Skin 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 Nu Skin Enterprises 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 Nu Skin i.e., Nu Skin and Bellring Brands go up and down completely randomly.

Pair Corralation between Nu Skin and Bellring Brands

Considering the 90-day investment horizon Nu Skin is expected to generate 1.49 times less return on investment than Bellring Brands. In addition to that, Nu Skin is 2.2 times more volatile than Bellring Brands LLC. It trades about 0.07 of its total potential returns per unit of risk. Bellring Brands LLC is currently generating about 0.24 per unit of volatility. If you would invest  7,178  in Bellring Brands LLC on September 13, 2024 and sell it today you would earn a total of  546.00  from holding Bellring Brands LLC or generate 7.61% return on investment over 90 days.

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

Nu Skin Enterprises  vs.  Bellring Brands LLC

Nu Skin Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Skin Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nu Skin is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bellring Brands LLC

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bellring Brands LLC are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Bellring Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nu Skin and Bellring Brands

The main advantage of trading using opposite Nu Skin and Bellring Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Skin 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 Nu Skin Enterprises 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.