Correlation Between Keurig Dr and Axalta Coating

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

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

Diversification Opportunities for Keurig Dr and Axalta Coating

0.32

Correlation Coefficient

Keurig Dr  Axalta Coating

Weak diversification

The 3 months correlation between Keurig and Axalta is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and Keurig Dr 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 Keurig Dr Pepper are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Keurig Dr i.e., Keurig Dr and Axalta Coating go up and down completely randomly.

Pair Corralation between Keurig Dr and Axalta Coating

Considering the 90-day investment horizon Keurig Dr is expected to generate 1.25 times less return on investment than Axalta Coating. But when comparing it to its historical volatility, Keurig Dr Pepper is 1.23 times less risky than Axalta Coating. It trades about 0.11 of its potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,401  in Axalta Coating Systems on November 29, 2024 and sell it today you would earn a total of  267.00  from holding Axalta Coating Systems or generate 7.85% return on investment over 90 days.

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

Keurig Dr Pepper  vs.  Axalta Coating Systems

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.

Axalta Coating Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axalta Coating Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Keurig Dr and Axalta Coating

The main advantage of trading using opposite Keurig Dr and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.

The idea behind Keurig Dr Pepper and Axalta Coating Systems 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.