Correlation Between Keurig Dr and Expand Energy

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

Diversification Opportunities for Keurig Dr and Expand Energy

-0.81

Correlation Coefficient

Keurig Dr  Expand Energy

Pay attention - limited upside

The 3 months correlation between Keurig and Expand is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy 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 Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Keurig Dr i.e., Keurig Dr and Expand Energy go up and down completely randomly.

Pair Corralation between Keurig Dr and Expand Energy

Considering the 90-day investment horizon Keurig Dr is expected to generate 6.25 times less return on investment than Expand Energy. But when comparing it to its historical volatility, Keurig Dr Pepper is 1.46 times less risky than Expand Energy. It trades about 0.01 of its potential returns per unit of risk. Expand Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,573  in Expand Energy on September 20, 2024 and sell it today you would earn a total of  1,889  from holding Expand Energy or generate 24.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Keurig Dr Pepper  vs.  Expand Energy

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 latest inconsistent performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Expand Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expand Energy are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Expand Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keurig Dr and Expand Energy

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

The idea behind Keurig Dr Pepper and Expand Energy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.