Correlation Between Keurig Dr and Clarity Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Keurig Dr and Clarity Pharmaceuticals 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 Keurig Dr and Clarity Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Keurig Dr Pepper and Clarity Pharmaceuticals, you can compare the effects of market volatilities on Keurig Dr and Clarity Pharmaceuticals 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 Keurig Dr with a short position of Clarity Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Clarity Pharmaceuticals.

Diversification Opportunities for Keurig Dr and Clarity Pharmaceuticals

0.7

Correlation Coefficient

Keurig Dr  Clarity Pharmaceuticals

Poor diversification

The 3 months correlation between Keurig and Clarity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Clarity Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarity Pharmaceuticals and Keurig Dr 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 Keurig Dr Pepper are associated (or correlated) with Clarity Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarity Pharmaceuticals has no effect on the direction of Keurig Dr i.e., Keurig Dr and Clarity Pharmaceuticals go up and down completely randomly.

Pair Corralation between Keurig Dr and Clarity Pharmaceuticals

Considering the 90-day investment horizon Keurig Dr is expected to generate 279.56 times less return on investment than Clarity Pharmaceuticals. But when comparing it to its historical volatility, Keurig Dr Pepper is 4.23 times less risky than Clarity Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Clarity Pharmaceuticals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Clarity Pharmaceuticals on September 17, 2024 and sell it today you would earn a total of  225.00  from holding Clarity Pharmaceuticals or generate 368.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.55%
Values	Daily Returns

Keurig Dr Pepper  vs.  Clarity Pharmaceuticals

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Clarity Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clarity Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Pair Trading with Keurig Dr and Clarity Pharmaceuticals

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

The idea behind Keurig Dr Pepper and Clarity Pharmaceuticals 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.