Correlation Between Keurig Dr and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Keurig Dr and Sealed Air 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 Dr and Sealed Air 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 Sealed Air, you can compare the effects of market volatilities on Keurig Dr and Sealed Air 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 Dr with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Sealed Air.
Diversification Opportunities for Keurig Dr and Sealed Air
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Keurig and Sealed is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air and Keurig Dr 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Keurig Dr i.e., Keurig Dr and Sealed Air go up and down completely randomly.
Pair Corralation between Keurig Dr and Sealed Air
Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Sealed Air. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 1.02 times less risky than Sealed Air. The stock trades about -0.19 of its potential returns per unit of risk. The Sealed Air is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,631 in Sealed Air on August 25, 2024 and sell it today you would lose (41.00) from holding Sealed Air or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keurig Dr Pepper vs. Sealed Air
Performance |
| Timeline |
| Keurig Dr Pepper |
| Sealed Air |
Keurig Dr and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keurig Dr and Sealed Air
The main advantage of trading using opposite Keurig Dr and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.The idea behind Keurig Dr Pepper and Sealed Air 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.| Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Reynolds Consumer Products | Sealed Air vs. Ball Corporation |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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