Correlation Between Coca Cola and Intel

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

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

Diversification Opportunities for Coca Cola and Intel

0.6

Correlation Coefficient

Coca Cola  Intel

Poor diversification

The 3 months correlation between Coca and Intel is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 FEMSA SAB are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Coca Cola i.e., Coca Cola and Intel go up and down completely randomly.

Pair Corralation between Coca Cola and Intel

Assuming the 90 days trading horizon Coca Cola is expected to generate 1.58 times less return on investment than Intel. But when comparing it to its historical volatility, Coca Cola FEMSA SAB is 1.13 times less risky than Intel. It trades about 0.05 of its potential returns per unit of risk. Intel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,935  in Intel on December 29, 2024 and sell it today you would earn a total of  247.00  from holding Intel or generate 12.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Coca Cola FEMSA SAB  vs.  Intel

Coca Cola FEMSA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola FEMSA SAB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Intel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coca Cola and Intel

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

The idea behind Coca Cola FEMSA SAB and Intel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.