Correlation Between Keurig Dr and SNDL

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

Diversification Opportunities for Keurig Dr and SNDL

-0.8

Correlation Coefficient

Keurig Dr  SNDL

Pay attention - limited upside

The 3 months correlation between Keurig and SNDL is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Keurig Dr i.e., Keurig Dr and SNDL go up and down completely randomly.

Pair Corralation between Keurig Dr and SNDL

Considering the 90-day investment horizon Keurig Dr Pepper is expected to generate 0.52 times more return on investment than SNDL. However, Keurig Dr Pepper is 1.91 times less risky than SNDL. It trades about 0.08 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.1 per unit of risk. If you would invest  3,204  in Keurig Dr Pepper on December 27, 2024 and sell it today you would earn a total of  202.00  from holding Keurig Dr Pepper or generate 6.3% return on investment over 90 days.

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

Keurig Dr Pepper  vs.  SNDL Inc

Keurig Dr Pepper

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Keurig Dr may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SNDL Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Keurig Dr and SNDL

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

The idea behind Keurig Dr Pepper and SNDL Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.