Correlation Between Kontoor Brands and Keurig Dr

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

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

Diversification Opportunities for Kontoor Brands and Keurig Dr

-0.67

Correlation Coefficient

Kontoor Brands  Keurig Dr

Excellent diversification

The 3 months correlation between Kontoor and Keurig is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands are associated (or correlated) with Keurig Dr. 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 Kontoor Brands i.e., Kontoor Brands and Keurig Dr go up and down completely randomly.

Pair Corralation between Kontoor Brands and Keurig Dr

Considering the 90-day investment horizon Kontoor Brands is expected to under-perform the Keurig Dr. In addition to that, Kontoor Brands is 2.08 times more volatile than Keurig Dr Pepper. It trades about -0.14 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about 0.1 per unit of volatility. If you would invest  3,173  in Keurig Dr Pepper on December 28, 2024 and sell it today you would earn a total of  253.00  from holding Keurig Dr Pepper or generate 7.97% return on investment over 90 days.

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

Kontoor Brands  vs.  Keurig Dr Pepper

Kontoor Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kontoor Brands 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 7 (%) 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.

Pair Trading with Kontoor Brands and Keurig Dr

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

The idea behind Kontoor Brands 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 CEOs Directory module to screen CEOs from public companies around the world.