Correlation Between Keurig Dr and Cars

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

Diversification Opportunities for Keurig Dr and Cars

-0.58

Correlation Coefficient

Keurig Dr  Cars

Excellent diversification

The 3 months correlation between Keurig and Cars is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Keurig Dr i.e., Keurig Dr and Cars go up and down completely randomly.

Pair Corralation between Keurig Dr and Cars

Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Cars. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 2.08 times less risky than Cars. The stock trades about 0.0 of its potential returns per unit of risk. The Cars Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,598  in Cars Inc on October 11, 2024 and sell it today you would earn a total of  88.00  from holding Cars Inc or generate 5.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Keurig Dr Pepper  vs.  Cars Inc

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.

Cars Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cars Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Cars may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Keurig Dr and Cars

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

The idea behind Keurig Dr Pepper and Cars Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.