Correlation Between Keurig Dr and Treasury Wine

Can any of the company-specific risk be diversified away by investing in both Keurig Dr and Treasury Wine 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 Treasury Wine 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 Treasury Wine Estates, you can compare the effects of market volatilities on Keurig Dr and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Treasury Wine.

Diversification Opportunities for Keurig Dr and Treasury Wine

0.35

Correlation Coefficient

Keurig Dr  Treasury Wine

Weak diversification

The 3 months correlation between Keurig and Treasury is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Keurig Dr i.e., Keurig Dr and Treasury Wine go up and down completely randomly.

Pair Corralation between Keurig Dr and Treasury Wine

Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Treasury Wine. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 1.92 times less risky than Treasury Wine. The stock trades about -0.12 of its potential returns per unit of risk. The Treasury Wine Estates is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  775.00  in Treasury Wine Estates on September 17, 2024 and sell it today you would lose (61.00) from holding Treasury Wine Estates or give up 7.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Keurig Dr Pepper  vs.  Treasury Wine Estates

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 weak 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.

Treasury Wine Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Keurig Dr and Treasury Wine

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

The idea behind Keurig Dr Pepper and Treasury Wine Estates 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.