Correlation Between Apple and Coca Cola

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

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

Diversification Opportunities for Apple and Coca Cola

-0.35

Correlation Coefficient

Apple  Coca Cola

Very good diversification

The 3 months correlation between Apple and Coca is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA and Apple 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 Apple Inc 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 FEMSA has no effect on the direction of Apple i.e., Apple and Coca Cola go up and down completely randomly.

Pair Corralation between Apple and Coca Cola

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the Coca Cola. In addition to that, Apple is 1.12 times more volatile than Coca Cola FEMSA SAB. It trades about -0.12 of its total potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.16 per unit of volatility. If you would invest  16,016  in Coca Cola FEMSA SAB on December 30, 2024 and sell it today you would earn a total of  2,855  from holding Coca Cola FEMSA SAB or generate 17.83% return on investment over 90 days.

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

Apple Inc  vs.  Coca Cola FEMSA SAB

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Coca Cola FEMSA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola FEMSA SAB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Coca Cola sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Coca Cola

The main advantage of trading using opposite Apple and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc and Coca Cola FEMSA SAB 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 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.