Correlation Between Kinsale Capital and Keurig

Can any of the company-specific risk be diversified away by investing in both Kinsale Capital and Keurig 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 Kinsale Capital and Keurig into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinsale Capital Group and Keurig Dr Pepper, you can compare the effects of market volatilities on Kinsale Capital and Keurig 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 Kinsale Capital with a short position of Keurig. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinsale Capital and Keurig.

Diversification Opportunities for Kinsale Capital and Keurig

0.12

Correlation Coefficient

Kinsale Capital  Keurig

Average diversification

The 3 months correlation between Kinsale and Keurig is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital Group and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper and Kinsale Capital 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 Kinsale Capital Group are associated (or correlated) with Keurig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Kinsale Capital i.e., Kinsale Capital and Keurig go up and down completely randomly.

Pair Corralation between Kinsale Capital and Keurig

Given the investment horizon of 90 days Kinsale Capital Group is expected to under-perform the Keurig. In addition to that, Kinsale Capital is 3.94 times more volatile than Keurig Dr Pepper. It trades about -0.19 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.19 per unit of volatility. If you would invest  9,978  in Keurig Dr Pepper on October 20, 2024 and sell it today you would lose (174.00) from holding Keurig Dr Pepper or give up 1.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Kinsale Capital Group  vs.  Keurig Dr Pepper

Kinsale Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinsale Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

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. Despite somewhat strong basic indicators, Keurig is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kinsale Capital and Keurig

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

The idea behind Kinsale Capital Group and Keurig Dr Pepper 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.