Correlation Between KEURIG and Canlan Ice

Can any of the company-specific risk be diversified away by investing in both KEURIG and Canlan Ice 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 and Canlan Ice 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 Canlan Ice Sports, you can compare the effects of market volatilities on KEURIG and Canlan Ice 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 with a short position of Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEURIG and Canlan Ice.

Diversification Opportunities for KEURIG and Canlan Ice

0.28

Correlation Coefficient

KEURIG  Canlan Ice

Modest diversification

The 3 months correlation between KEURIG and Canlan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KEURIG DR PEPPER and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and KEURIG 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 Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of KEURIG i.e., KEURIG and Canlan Ice go up and down completely randomly.

Pair Corralation between KEURIG and Canlan Ice

Assuming the 90 days trading horizon KEURIG DR PEPPER is expected to under-perform the Canlan Ice. In addition to that, KEURIG is 11.65 times more volatile than Canlan Ice Sports. It trades about -0.12 of its total potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.13 per unit of volatility. If you would invest  295.00  in Canlan Ice Sports on December 4, 2024 and sell it today you would earn a total of  2.00  from holding Canlan Ice Sports or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

KEURIG DR PEPPER  vs.  Canlan Ice Sports

KEURIG DR PEPPER

Risk-Adjusted Performance

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 latest unfluctuating 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 KEURIG DR PEPPER investors.

Canlan Ice Sports

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KEURIG and Canlan Ice

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

The idea behind KEURIG DR PEPPER and Canlan Ice Sports 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..