Correlation Between Flow Beverage and Keurig Dr

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

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

Diversification Opportunities for Flow Beverage and Keurig Dr

-0.06

Correlation Coefficient

Flow Beverage  Keurig Dr

Good diversification

The 3 months correlation between Flow and Keurig is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Flow Beverage Corp 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 Flow Beverage 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 Flow Beverage Corp 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 Flow Beverage i.e., Flow Beverage and Keurig Dr go up and down completely randomly.

Pair Corralation between Flow Beverage and Keurig Dr

Assuming the 90 days horizon Flow Beverage Corp is expected to generate 6.62 times more return on investment than Keurig Dr. However, Flow Beverage is 6.62 times more volatile than Keurig Dr Pepper. It trades about 0.02 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  10.00  in Flow Beverage Corp on December 2, 2024 and sell it today you would lose (1.36) from holding Flow Beverage Corp or give up 13.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Flow Beverage Corp  vs.  Keurig Dr Pepper

Flow Beverage Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Beverage Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Flow Beverage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Keurig Dr Pepper

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Keurig Dr is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Flow Beverage and Keurig Dr

The main advantage of trading using opposite Flow Beverage and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Beverage 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 Flow Beverage Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.