Correlation Between Keurig Dr and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Keurig Dr and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies, you can compare the effects of market volatilities on Keurig Dr and Sensient Technologies 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Sensient Technologies.
Diversification Opportunities for Keurig Dr and Sensient Technologies
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Keurig and Sensient is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Keurig Dr i.e., Keurig Dr and Sensient Technologies go up and down completely randomly.
Pair Corralation between Keurig Dr and Sensient Technologies
Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Sensient Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 1.39 times less risky than Sensient Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The Sensient Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,686 in Sensient Technologies on August 31, 2024 and sell it today you would earn a total of 78.00 from holding Sensient Technologies or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keurig Dr Pepper vs. Sensient Technologies
Performance |
| Timeline |
| Keurig Dr Pepper |
| Sensient Technologies |
Keurig Dr and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keurig Dr and Sensient Technologies
The main advantage of trading using opposite Keurig Dr and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.| Keurig Dr vs. Monster Beverage Corp | Keurig Dr vs. RLJ Lodging Trust | Keurig Dr vs. Aquagold International | Keurig Dr vs. Stepstone Group |
| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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