Correlation Between Coca Cola and Metrovacesa

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

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

Diversification Opportunities for Coca Cola and Metrovacesa

0.0

Correlation Coefficient

Coca Cola  Metrovacesa

Pay attention - limited upside

The 3 months correlation between Coca and Metrovacesa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and Metrovacesa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrovacesa SA and Coca Cola 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 Coca Cola European Partners are associated (or correlated) with Metrovacesa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrovacesa SA has no effect on the direction of Coca Cola i.e., Coca Cola and Metrovacesa go up and down completely randomly.

Pair Corralation between Coca Cola and Metrovacesa

Assuming the 90 days trading horizon Coca Cola is expected to generate 1.06 times less return on investment than Metrovacesa. In addition to that, Coca Cola is 1.33 times more volatile than Metrovacesa SA. It trades about 0.06 of its total potential returns per unit of risk. Metrovacesa SA is currently generating about 0.09 per unit of volatility. If you would invest  828.00  in Metrovacesa SA on September 3, 2024 and sell it today you would earn a total of  45.00  from holding Metrovacesa SA or generate 5.43% return on investment over 90 days.

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

Coca Cola European Partners  vs.  Metrovacesa SA

Coca Cola European

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola European Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Coca Cola is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Metrovacesa SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metrovacesa SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Metrovacesa is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Coca Cola and Metrovacesa

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

The idea behind Coca Cola European Partners and Metrovacesa SA 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.