Correlation Between Keurig Dr and SNDL
Can any of the company-specific risk be diversified away by investing in both Keurig Dr and SNDL 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 SNDL 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 SNDL Inc, you can compare the effects of market volatilities on Keurig Dr and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and SNDL.
Diversification Opportunities for Keurig Dr and SNDL
Very weak diversification
The 3 months correlation between Keurig and SNDL is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Keurig Dr i.e., Keurig Dr and SNDL go up and down completely randomly.
Pair Corralation between Keurig Dr and SNDL
Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the SNDL. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 3.71 times less risky than SNDL. The stock trades about 0.0 of its potential returns per unit of risk. The SNDL Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 218.00 in SNDL Inc on October 21, 2024 and sell it today you would lose (40.00) from holding SNDL Inc or give up 18.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keurig Dr Pepper vs. SNDL Inc
Performance |
| Timeline |
| Keurig Dr Pepper |
| SNDL Inc |
Keurig Dr and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keurig Dr and SNDL
The main advantage of trading using opposite Keurig Dr and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL's long position.| Keurig Dr vs. Monster Beverage Corp | Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Coca Cola Consolidated | Keurig Dr vs. PepsiCo |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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