Correlation Between Keurig Dr and Hershey
Can any of the company-specific risk be diversified away by investing in both Keurig Dr and Hershey 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 Hershey 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 Hershey Co, you can compare the effects of market volatilities on Keurig Dr and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Hershey.
Diversification Opportunities for Keurig Dr and Hershey
Good diversification
The 3 months correlation between Keurig and Hershey is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Keurig Dr i.e., Keurig Dr and Hershey go up and down completely randomly.
Pair Corralation between Keurig Dr and Hershey
Considering the 90-day investment horizon Keurig Dr Pepper is expected to generate 0.75 times more return on investment than Hershey. However, Keurig Dr Pepper is 1.33 times less risky than Hershey. It trades about 0.22 of its potential returns per unit of risk. Hershey Co is currently generating about -0.12 per unit of risk. If you would invest 3,048 in Keurig Dr Pepper on January 24, 2024 and sell it today you would earn a total of 128.00 from holding Keurig Dr Pepper or generate 4.2% 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. Hershey Co
Performance |
Timeline |
Keurig Dr Pepper |
Hershey |
Keurig Dr and Hershey Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Keurig Dr and Hershey
The main advantage of trading using opposite Keurig Dr and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Vita Coco | Keurig Dr vs. PepsiCo | Keurig Dr vs. Coca Cola Femsa SAB |
Hershey vs. Bunge Limited | Hershey vs. Archer Daniels Midland | Hershey vs. Fresh Del Monte | Hershey vs. Limoneira Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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