Correlation Between Keurig Dr and First Republic

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

Diversification Opportunities for Keurig Dr and First Republic

0.49

Correlation Coefficient

Keurig Dr  First Republic

Very weak diversification

The 3 months correlation between Keurig and First is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and First Republic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Republic Bank 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 First Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Republic Bank has no effect on the direction of Keurig Dr i.e., Keurig Dr and First Republic go up and down completely randomly.

Pair Corralation between Keurig Dr and First Republic

Considering the 90-day investment horizon Keurig Dr Pepper is expected to generate 0.04 times more return on investment than First Republic. However, Keurig Dr Pepper is 28.51 times less risky than First Republic. It trades about 0.0 of its potential returns per unit of risk. First Republic Bank is currently generating about -0.04 per unit of risk. If you would invest  3,390  in Keurig Dr Pepper on September 20, 2024 and sell it today you would lose (143.50) from holding Keurig Dr Pepper or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	28.43%
Values	Daily Returns

Keurig Dr Pepper  vs.  First Republic Bank

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.

First Republic Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Republic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, First Republic is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Keurig Dr and First Republic

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

The idea behind Keurig Dr Pepper and First Republic Bank 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.