Correlation Between Keurig Dr and NBCUNIVERSAL

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

Diversification Opportunities for Keurig Dr and NBCUNIVERSAL

-0.14

Correlation Coefficient

Keurig Dr  NBCUNIVERSAL

Good diversification

The 3 months correlation between Keurig and NBCUNIVERSAL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of Keurig Dr i.e., Keurig Dr and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between Keurig Dr and NBCUNIVERSAL

Considering the 90-day investment horizon Keurig Dr is expected to generate 2.61 times less return on investment than NBCUNIVERSAL. But when comparing it to its historical volatility, Keurig Dr Pepper is 1.89 times less risky than NBCUNIVERSAL. It trades about 0.05 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,293  in NBCUNIVERSAL MEDIA LLC on September 21, 2024 and sell it today you would earn a total of  134.00  from holding NBCUNIVERSAL MEDIA LLC or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Keurig Dr Pepper  vs.  NBCUNIVERSAL MEDIA LLC

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.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NBCUNIVERSAL MEDIA LLC investors.

Pair Trading with Keurig Dr and NBCUNIVERSAL

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

The idea behind Keurig Dr Pepper and NBCUNIVERSAL MEDIA LLC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.