Correlation Between Jeld Wen and Keurig Dr

Can any of the company-specific risk be diversified away by investing in both Jeld Wen and Keurig Dr 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 Jeld Wen and Keurig Dr into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jeld Wen Holding and Keurig Dr Pepper, you can compare the effects of market volatilities on Jeld Wen and Keurig Dr 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 Jeld Wen with a short position of Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and Keurig Dr.

Diversification Opportunities for Jeld Wen and Keurig Dr

-0.6

Correlation Coefficient

Jeld Wen  Keurig Dr

Excellent diversification

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

Pair Corralation between Jeld Wen and Keurig Dr

Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the Keurig Dr. In addition to that, Jeld Wen is 3.04 times more volatile than Keurig Dr Pepper. It trades about -0.03 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about 0.06 per unit of volatility. If you would invest  3,223  in Keurig Dr Pepper on March 11, 2024 and sell it today you would earn a total of  240.00  from holding Keurig Dr Pepper or generate 7.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Jeld Wen Holding  vs.  Keurig Dr Pepper

Jeld Wen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Keurig Dr Pepper

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Keurig Dr reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jeld Wen and Keurig Dr

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

The idea behind Jeld Wen Holding and Keurig Dr Pepper 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.