Correlation Between Keurig Dr and StandardAero,

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

Diversification Opportunities for Keurig Dr and StandardAero,

0.61

Correlation Coefficient

Keurig Dr  StandardAero,

Poor diversification

The 3 months correlation between Keurig and StandardAero, is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and StandardAero, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StandardAero, 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 StandardAero,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StandardAero, has no effect on the direction of Keurig Dr i.e., Keurig Dr and StandardAero, go up and down completely randomly.

Pair Corralation between Keurig Dr and StandardAero,

Considering the 90-day investment horizon Keurig Dr is expected to generate 2.59 times less return on investment than StandardAero,. But when comparing it to its historical volatility, Keurig Dr Pepper is 1.66 times less risky than StandardAero,. It trades about 0.06 of its potential returns per unit of risk. StandardAero, is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,540  in StandardAero, on December 22, 2024 and sell it today you would earn a total of  319.00  from holding StandardAero, or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Keurig Dr Pepper  vs.  StandardAero,

Keurig Dr Pepper

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Keurig Dr is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

StandardAero,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in StandardAero, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, StandardAero, displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keurig Dr and StandardAero,

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

The idea behind Keurig Dr Pepper and StandardAero, 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.