Correlation Between Keurig Dr and Borr Drilling

Can any of the company-specific risk be diversified away by investing in both Keurig Dr and Borr Drilling 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 Borr Drilling 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 Borr Drilling, you can compare the effects of market volatilities on Keurig Dr and Borr Drilling 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 Borr Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Borr Drilling.

Diversification Opportunities for Keurig Dr and Borr Drilling

0.85

Correlation Coefficient

Keurig Dr  Borr Drilling

Very poor diversification

The 3 months correlation between Keurig and Borr is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Borr Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borr Drilling 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 Borr Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borr Drilling has no effect on the direction of Keurig Dr i.e., Keurig Dr and Borr Drilling go up and down completely randomly.

Pair Corralation between Keurig Dr and Borr Drilling

Considering the 90-day investment horizon Keurig Dr Pepper is expected to generate 0.34 times more return on investment than Borr Drilling. However, Keurig Dr Pepper is 2.92 times less risky than Borr Drilling. It trades about 0.03 of its potential returns per unit of risk. Borr Drilling is currently generating about -0.05 per unit of risk. If you would invest  2,984  in Keurig Dr Pepper on October 12, 2024 and sell it today you would earn a total of  128.00  from holding Keurig Dr Pepper or generate 4.29% return on investment over 90 days.

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

Keurig Dr Pepper  vs.  Borr Drilling

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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Borr Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borr Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Keurig Dr and Borr Drilling

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

The idea behind Keurig Dr Pepper and Borr Drilling 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..