Correlation Between Emerson Radio and Keurig Dr

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

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

Diversification Opportunities for Emerson Radio and Keurig Dr

0.65

Correlation Coefficient

Emerson Radio  Keurig Dr

Poor diversification

The 3 months correlation between Emerson and Keurig is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper and Emerson Radio 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 Emerson Radio are associated (or correlated) with Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Emerson Radio i.e., Emerson Radio and Keurig Dr go up and down completely randomly.

Pair Corralation between Emerson Radio and Keurig Dr

Considering the 90-day investment horizon Emerson Radio is expected to under-perform the Keurig Dr. In addition to that, Emerson Radio is 2.11 times more volatile than Keurig Dr Pepper. It trades about -0.09 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.18 per unit of volatility. If you would invest  3,748  in Keurig Dr Pepper on September 29, 2024 and sell it today you would lose (517.00) from holding Keurig Dr Pepper or give up 13.79% of portfolio value over 90 days.

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

Emerson Radio  vs.  Keurig Dr Pepper

Emerson Radio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 inconsistent performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Emerson Radio and Keurig Dr

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

The idea behind Emerson Radio and Keurig Dr Pepper 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.