Correlation Between Coca Cola and Zevia Pbc

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

Diversification Opportunities for Coca Cola and Zevia Pbc

-0.74

Correlation Coefficient

Coca Cola  Zevia Pbc

Pay attention - limited upside

The 3 months correlation between Coca and Zevia is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and Zevia Pbc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zevia Pbc 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 Zevia Pbc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zevia Pbc has no effect on the direction of Coca Cola i.e., Coca Cola and Zevia Pbc go up and down completely randomly.

Pair Corralation between Coca Cola and Zevia Pbc

Given the investment horizon of 90 days Coca Cola European Partners is expected to generate 0.19 times more return on investment than Zevia Pbc. However, Coca Cola European Partners is 5.14 times less risky than Zevia Pbc. It trades about 0.18 of its potential returns per unit of risk. Zevia Pbc is currently generating about -0.13 per unit of risk. If you would invest  7,623  in Coca Cola European Partners on December 28, 2024 and sell it today you would earn a total of  1,003  from holding Coca Cola European Partners or generate 13.16% return on investment over 90 days.

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

Coca Cola European Partners  vs.  Zevia Pbc

Coca Cola European

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola European Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Coca Cola reported solid returns over the last few months and may actually be approaching a breakup point.

Zevia Pbc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zevia Pbc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat 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.

Pair Trading with Coca Cola and Zevia Pbc

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

The idea behind Coca Cola European Partners and Zevia Pbc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.