Correlation Between Keurig Dr and ScanSource

Can any of the company-specific risk be diversified away by investing in both Keurig Dr and ScanSource 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 ScanSource 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 ScanSource, you can compare the effects of market volatilities on Keurig Dr and ScanSource 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 ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and ScanSource.

Diversification Opportunities for Keurig Dr and ScanSource

-0.78

Correlation Coefficient

Keurig Dr  ScanSource

Pay attention - limited upside

The 3 months correlation between Keurig and ScanSource is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Keurig Dr i.e., Keurig Dr and ScanSource go up and down completely randomly.

Pair Corralation between Keurig Dr and ScanSource

Considering the 90-day investment horizon Keurig Dr is expected to generate 1.09 times less return on investment than ScanSource. But when comparing it to its historical volatility, Keurig Dr Pepper is 1.27 times less risky than ScanSource. It trades about 0.2 of its potential returns per unit of risk. ScanSource is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,150  in ScanSource on April 7, 2025 and sell it today you would earn a total of  140.00  from holding ScanSource or generate 3.37% return on investment over 90 days.

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

Keurig Dr Pepper  vs.  ScanSource

Keurig Dr Pepper

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Keurig Dr is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

ScanSource

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ScanSource exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keurig Dr and ScanSource

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

The idea behind Keurig Dr Pepper and ScanSource 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.