Correlation Between Dutch Bros and Cordia

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

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

Diversification Opportunities for Dutch Bros and Cordia

-0.49

Correlation Coefficient

Dutch Bros  Cordia

Very good diversification

The 3 months correlation between Dutch and Cordia is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dutch Bros and Cordia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cordia and Dutch Bros 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 Dutch Bros are associated (or correlated) with Cordia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cordia has no effect on the direction of Dutch Bros i.e., Dutch Bros and Cordia go up and down completely randomly.

Pair Corralation between Dutch Bros and Cordia

If you would invest  3,590  in Dutch Bros on October 26, 2024 and sell it today you would earn a total of  2,501  from holding Dutch Bros or generate 69.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Dutch Bros  vs.  Cordia

Dutch Bros

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dutch Bros are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Dutch Bros unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cordia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dutch Bros and Cordia

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

The idea behind Dutch Bros and Cordia 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.