Correlation Between Keurig Dr and Gladstone Investment

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

Diversification Opportunities for Keurig Dr and Gladstone Investment

-0.4

Correlation Coefficient

Keurig Dr  Gladstone Investment

Very good diversification

The 3 months correlation between Keurig and Gladstone is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Keurig Dr i.e., Keurig Dr and Gladstone Investment go up and down completely randomly.

Pair Corralation between Keurig Dr and Gladstone Investment

Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Gladstone Investment. In addition to that, Keurig Dr is 2.53 times more volatile than Gladstone Investment. It trades about -0.52 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.07 per unit of volatility. If you would invest  2,462  in Gladstone Investment on October 9, 2024 and sell it today you would earn a total of  10.00  from holding Gladstone Investment or generate 0.41% return on investment over 90 days.

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

Keurig Dr Pepper  vs.  Gladstone Investment

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.

Gladstone Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Keurig Dr and Gladstone Investment

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

The idea behind Keurig Dr Pepper and Gladstone Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.