Correlation Between Coca Cola and Keurig Dr

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Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and Keurig Dr into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola European Partners and Keurig Dr Pepper, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Keurig Dr.

Diversification Opportunities for Coca Cola and Keurig Dr

CocaKeurigDiversified AwayCocaKeurigDiversified Away100%
0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Coca and Keurig is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners 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 Coca Cola 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 Coca Cola European Partners 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 Coca Cola i.e., Coca Cola and Keurig Dr go up and down completely randomly.

Pair Corralation between Coca Cola and Keurig Dr

Assuming the 90 days horizon Coca Cola European Partners is expected to generate 1.48 times more return on investment than Keurig Dr. However, Coca Cola is 1.48 times more volatile than Keurig Dr Pepper. It trades about 0.09 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about 0.05 per unit of risk. If you would invest  7,130  in Coca Cola European Partners on November 19, 2024 and sell it today you would earn a total of  690.00  from holding Coca Cola European Partners or generate 9.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Coca Cola European Partners  vs.  Keurig Dr Pepper

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15CK0 DP5
       Timeline  
Coca Cola European 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola European Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb717273747576777879
Keurig Dr Pepper 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Keurig Dr is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2929.53030.53131.532

Coca Cola and Keurig Dr Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.92-4.43-2.95-1.460.01.513.074.636.197.75 0.050.100.150.20
JavaScript chart by amCharts 3.21.15CK0 DP5
       Returns  

Pair Trading with Coca Cola and Keurig Dr

The main advantage of trading using opposite Coca Cola and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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 Coca Cola European Partners 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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