Correlation Between DNA Brands and Keurig Dr

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

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

Diversification Opportunities for DNA Brands and Keurig Dr

-0.24

Correlation Coefficient

DNA Brands  Keurig Dr

Very good diversification

The 3 months correlation between DNA and Keurig is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding DNA Brands 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 DNA Brands 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 DNA Brands 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 DNA Brands i.e., DNA Brands and Keurig Dr go up and down completely randomly.

Pair Corralation between DNA Brands and Keurig Dr

Given the investment horizon of 90 days DNA Brands is expected to generate 96.89 times more return on investment than Keurig Dr. However, DNA Brands is 96.89 times more volatile than Keurig Dr Pepper. It trades about 0.15 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about 0.08 per unit of risk. If you would invest  0.02  in DNA Brands on December 26, 2024 and sell it today you would lose (0.01) from holding DNA Brands or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

DNA Brands  vs.  Keurig Dr Pepper

DNA Brands

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DNA Brands are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, DNA Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Keurig Dr Pepper

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Keurig Dr may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with DNA Brands and Keurig Dr

The main advantage of trading using opposite DNA Brands and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DNA Brands 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 DNA Brands 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.