Correlation Between HE Equipment and Keurig Dr

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

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

Diversification Opportunities for HE Equipment and Keurig Dr

-0.7

Correlation Coefficient

HE Equipment  Keurig Dr

Excellent diversification

The 3 months correlation between HEES and Keurig is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services 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 HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Keurig Dr go up and down completely randomly.

Pair Corralation between HE Equipment and Keurig Dr

Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the Keurig Dr. In addition to that, HE Equipment is 2.03 times more volatile than Keurig Dr Pepper. It trades about -0.51 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.07 per unit of volatility. If you would invest  3,285  in Keurig Dr Pepper on September 24, 2024 and sell it today you would lose (48.00) from holding Keurig Dr Pepper or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HE Equipment Services  vs.  Keurig Dr Pepper

HE Equipment Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, HE Equipment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. Even with inconsistent performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with HE Equipment and Keurig Dr

The main advantage of trading using opposite HE Equipment and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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 HE Equipment Services 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.