Correlation Between Alphabet and Keurig

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

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

Diversification Opportunities for Alphabet and Keurig

-0.68

Correlation Coefficient

Alphabet  Keurig

Excellent diversification

The 3 months correlation between Alphabet and Keurig is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Keurig go up and down completely randomly.

Pair Corralation between Alphabet and Keurig

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 5.34 times more return on investment than Keurig. However, Alphabet is 5.34 times more volatile than Keurig Dr Pepper. It trades about 0.22 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.16 per unit of risk. If you would invest  15,819  in Alphabet Inc Class C on September 13, 2024 and sell it today you would earn a total of  3,852  from holding Alphabet Inc Class C or generate 24.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Alphabet Inc Class C  vs.  Keurig Dr Pepper

Alphabet Class C

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Keurig is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphabet and Keurig

The main advantage of trading using opposite Alphabet and Keurig positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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 CEOs Directory module to screen CEOs from public companies around the world.