Correlation Between 90331HPL1 and Keurig

Can any of the company-specific risk be diversified away by investing in both 90331HPL1 and Keurig 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 90331HPL1 and Keurig into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US BANK NATIONAL and Keurig Dr Pepper, you can compare the effects of market volatilities on 90331HPL1 and Keurig 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 90331HPL1 with a short position of Keurig. Check out your portfolio center. Please also check ongoing floating volatility patterns of 90331HPL1 and Keurig.

Diversification Opportunities for 90331HPL1 and Keurig

0.32

Correlation Coefficient

90331HPL1  Keurig

Weak diversification

The 3 months correlation between 90331HPL1 and Keurig is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding US BANK NATIONAL 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 90331HPL1 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 US BANK NATIONAL are associated (or correlated) with Keurig. 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 90331HPL1 i.e., 90331HPL1 and Keurig go up and down completely randomly.

Pair Corralation between 90331HPL1 and Keurig

Assuming the 90 days trading horizon US BANK NATIONAL is expected to under-perform the Keurig. In addition to that, 90331HPL1 is 3.3 times more volatile than Keurig Dr Pepper. It trades about -0.12 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.19 per unit of volatility. If you would invest  10,146  in Keurig Dr Pepper on September 28, 2024 and sell it today you would lose (295.00) from holding Keurig Dr Pepper or give up 2.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	61.67%
Values	Daily Returns

US BANK NATIONAL  vs.  Keurig Dr Pepper

US BANK NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US BANK NATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 90331HPL1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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. Despite somewhat strong basic indicators, Keurig is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 90331HPL1 and Keurig

The main advantage of trading using opposite 90331HPL1 and Keurig positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 90331HPL1 position performs unexpectedly, Keurig 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 will offset losses from the drop in Keurig's long position.

The idea behind US BANK NATIONAL 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.

Check out your portfolio center.

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 Valuation module to check real value of public entities based on technical and fundamental data.