Correlation Between KEURIG and Vistra Energy

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

Diversification Opportunities for KEURIG and Vistra Energy

-0.6

Correlation Coefficient

KEURIG  Vistra Energy

Excellent diversification

The 3 months correlation between KEURIG and Vistra is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding KEURIG DR PEPPER and Vistra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Energy Corp 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 Vistra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Energy Corp has no effect on the direction of KEURIG i.e., KEURIG and Vistra Energy go up and down completely randomly.

Pair Corralation between KEURIG and Vistra Energy

Assuming the 90 days trading horizon KEURIG DR PEPPER is expected to under-perform the Vistra Energy. But the bond apears to be less risky and, when comparing its historical volatility, KEURIG DR PEPPER is 4.77 times less risky than Vistra Energy. The bond trades about -0.17 of its potential returns per unit of risk. The Vistra Energy Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  8,919  in Vistra Energy Corp on September 14, 2024 and sell it today you would earn a total of  5,589  from holding Vistra Energy Corp or generate 62.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.3%
Values	Daily Returns

KEURIG DR PEPPER  vs.  Vistra Energy Corp

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 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 KEURIG DR PEPPER investors.

Vistra Energy Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vistra Energy Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Vistra Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KEURIG and Vistra Energy

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

The idea behind KEURIG DR PEPPER and Vistra Energy Corp 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.