Correlation Between Keurig Dr and BLACK

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

Diversification Opportunities for Keurig Dr and BLACK

0.51

Correlation Coefficient

Keurig Dr  BLACK

Very weak diversification

The 3 months correlation between Keurig and BLACK is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and BLACK HILLS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLACK HILLS P 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 BLACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLACK HILLS P has no effect on the direction of Keurig Dr i.e., Keurig Dr and BLACK go up and down completely randomly.

Pair Corralation between Keurig Dr and BLACK

Considering the 90-day investment horizon Keurig Dr Pepper is expected to generate 1.26 times more return on investment than BLACK. However, Keurig Dr is 1.26 times more volatile than BLACK HILLS P. It trades about 0.0 of its potential returns per unit of risk. BLACK HILLS P is currently generating about -0.01 per unit of risk. If you would invest  3,258  in Keurig Dr Pepper on September 30, 2024 and sell it today you would lose (31.00) from holding Keurig Dr Pepper or give up 0.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	74.6%
Values	Daily Returns

Keurig Dr Pepper  vs.  BLACK HILLS P

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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

BLACK HILLS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLACK HILLS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BLACK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Keurig Dr and BLACK

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

The idea behind Keurig Dr Pepper and BLACK HILLS P 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.