Correlation Between Treasury Wine and Keurig Dr

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

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

Diversification Opportunities for Treasury Wine and Keurig Dr

0.59

Correlation Coefficient

Treasury Wine  Keurig Dr

Very weak diversification

The 3 months correlation between Treasury and Keurig is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates 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 Treasury Wine 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 Treasury Wine Estates 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 Treasury Wine i.e., Treasury Wine and Keurig Dr go up and down completely randomly.

Pair Corralation between Treasury Wine and Keurig Dr

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Keurig Dr. In addition to that, Treasury Wine is 1.19 times more volatile than Keurig Dr Pepper. It trades about -0.25 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.03 per unit of volatility. If you would invest  3,238  in Keurig Dr Pepper on October 4, 2024 and sell it today you would lose (26.00) from holding Keurig Dr Pepper or give up 0.8% of portfolio value over 90 days.

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

Treasury Wine Estates  vs.  Keurig Dr Pepper

Treasury Wine Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 latest inconsistent performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Treasury Wine and Keurig Dr

The main advantage of trading using opposite Treasury Wine and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine 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 Treasury Wine Estates 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.