Correlation Between Infrastrutture Wireless and Coca Cola

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

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

Diversification Opportunities for Infrastrutture Wireless and Coca Cola

0.72

Correlation Coefficient

Infrastrutture Wireless  Coca Cola

Poor diversification

The 3 months correlation between Infrastrutture and Coca is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Infrastrutture Wireless Italia and Coca Cola Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Infrastrutture Wireless 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 Infrastrutture Wireless Italiane 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 Infrastrutture Wireless i.e., Infrastrutture Wireless and Coca Cola go up and down completely randomly.

Pair Corralation between Infrastrutture Wireless and Coca Cola

Assuming the 90 days trading horizon Infrastrutture Wireless Italiane is expected to generate 1.37 times more return on investment than Coca Cola. However, Infrastrutture Wireless is 1.37 times more volatile than Coca Cola Co. It trades about 0.08 of its potential returns per unit of risk. Coca Cola Co is currently generating about -0.05 per unit of risk. If you would invest  958.00  in Infrastrutture Wireless Italiane on October 7, 2024 and sell it today you would earn a total of  31.00  from holding Infrastrutture Wireless Italiane or generate 3.24% return on investment over 90 days.

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

Infrastrutture Wireless Italia  vs.  Coca Cola Co

Infrastrutture Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane 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

0 of 100

Very Weak

Over the last 90 days Coca Cola Co 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.

Pair Trading with Infrastrutture Wireless and Coca Cola

The main advantage of trading using opposite Infrastrutture Wireless and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infrastrutture Wireless 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 Infrastrutture Wireless Italiane 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.