Correlation Between Aerovate Therapeutics and Keurig

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

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

Diversification Opportunities for Aerovate Therapeutics and Keurig

-0.41

Correlation Coefficient

Aerovate Therapeutics  Keurig

Very good diversification

The 3 months correlation between Aerovate and Keurig is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics 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 Aerovate Therapeutics 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 Aerovate Therapeutics 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 Aerovate Therapeutics i.e., Aerovate Therapeutics and Keurig go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Keurig

Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the Keurig. In addition to that, Aerovate Therapeutics is 4.8 times more volatile than Keurig Dr Pepper. It trades about -0.03 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about 0.04 per unit of volatility. If you would invest  9,916  in Keurig Dr Pepper on December 26, 2024 and sell it today you would earn a total of  78.00  from holding Keurig Dr Pepper or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Aerovate Therapeutics  vs.  Keurig Dr Pepper

Aerovate Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aerovate Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Aerovate Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Keurig Dr Pepper

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Keurig is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aerovate Therapeutics and Keurig

The main advantage of trading using opposite Aerovate Therapeutics and Keurig positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics 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 Aerovate Therapeutics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.