Correlation Between Keurig Dr and Ross Stores

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

Diversification Opportunities for Keurig Dr and Ross Stores

0.58

Correlation Coefficient

Keurig Dr  Ross Stores

Very weak diversification

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

Pair Corralation between Keurig Dr and Ross Stores

Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Ross Stores. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 1.23 times less risky than Ross Stores. The stock trades about -0.16 of its potential returns per unit of risk. The Ross Stores is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15,131  in Ross Stores on September 2, 2024 and sell it today you would earn a total of  356.00  from holding Ross Stores or generate 2.35% return on investment over 90 days.

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

Keurig Dr Pepper  vs.  Ross Stores

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.

Ross Stores

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Keurig Dr and Ross Stores

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

The idea behind Keurig Dr Pepper and Ross Stores 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.