Correlation Between Las Vegas and Coca Cola

Can any of the company-specific risk be diversified away by investing in both Las Vegas and Coca Cola 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 Las Vegas and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Las Vegas Sands and Coca Cola Co, you can compare the effects of market volatilities on Las Vegas and Coca Cola 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 Las Vegas with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Coca Cola.

Diversification Opportunities for Las Vegas and Coca Cola

-0.36

Correlation Coefficient

Las Vegas  Coca Cola

Very good diversification

The 3 months correlation between Las and Coca is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Coca Cola Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Las Vegas 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 Las Vegas Sands are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Las Vegas i.e., Las Vegas and Coca Cola go up and down completely randomly.

Pair Corralation between Las Vegas and Coca Cola

Assuming the 90 days trading horizon Las Vegas Sands is expected to under-perform the Coca Cola. In addition to that, Las Vegas is 1.71 times more volatile than Coca Cola Co. It trades about -0.03 of its total potential returns per unit of risk. Coca Cola Co is currently generating about 0.22 per unit of volatility. If you would invest  6,330  in Coca Cola Co on November 19, 2024 and sell it today you would earn a total of  540.00  from holding Coca Cola Co or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Las Vegas Sands  vs.  Coca Cola Co

Las Vegas Sands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Las Vegas Sands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Coca Cola

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Las Vegas and Coca Cola

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

The idea behind Las Vegas Sands and Coca Cola Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.