Correlation Between KRISPY KREME and Zoetis

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and Zoetis Inc, you can compare the effects of market volatilities on KRISPY KREME and Zoetis 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 KRISPY KREME with a short position of Zoetis. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Zoetis.

Diversification Opportunities for KRISPY KREME and Zoetis

0.54

Correlation Coefficient

KRISPY KREME  Zoetis

Very weak diversification

The 3 months correlation between KRISPY and Zoetis is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Zoetis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoetis Inc and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with Zoetis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoetis Inc has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and Zoetis go up and down completely randomly.

Pair Corralation between KRISPY KREME and Zoetis

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the Zoetis. In addition to that, KRISPY KREME is 2.83 times more volatile than Zoetis Inc. It trades about -0.16 of its total potential returns per unit of risk. Zoetis Inc is currently generating about -0.04 per unit of volatility. If you would invest  15,679  in Zoetis Inc on December 23, 2024 and sell it today you would lose (725.00) from holding Zoetis Inc or give up 4.62% of portfolio value over 90 days.

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

KRISPY KREME DL 01  vs.  Zoetis Inc

KRISPY KREME DL

Risk-Adjusted Performance

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Zoetis Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zoetis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zoetis is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KRISPY KREME and Zoetis

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

The idea behind KRISPY KREME DL 01 and Zoetis Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.