Correlation Between Coca Cola and COCA A
Can any of the company-specific risk be diversified away by investing in both Coca Cola and COCA A 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 COCA A 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 COCA A HBC, you can compare the effects of market volatilities on Coca Cola and COCA A 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 COCA A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and COCA A.
Diversification Opportunities for Coca Cola and COCA A
Poor diversification
The 3 months correlation between Coca and COCA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and COCA A HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A HBC 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 COCA A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A HBC has no effect on the direction of Coca Cola i.e., Coca Cola and COCA A go up and down completely randomly.
Pair Corralation between Coca Cola and COCA A
Assuming the 90 days horizon Coca Cola is expected to generate 1.58 times less return on investment than COCA A. In addition to that, Coca Cola is 1.09 times more volatile than COCA A HBC. It trades about 0.09 of its total potential returns per unit of risk. COCA A HBC is currently generating about 0.16 per unit of volatility. If you would invest 3,260 in COCA A HBC on November 19, 2024 and sell it today you would earn a total of 540.00 from holding COCA A HBC or generate 16.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Coca Cola European Partners vs. COCA A HBC
Performance |
Timeline |
Coca Cola European |
COCA A HBC |
Coca Cola and COCA A Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and COCA A
The main advantage of trading using opposite Coca Cola and COCA A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, COCA A 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 A will offset losses from the drop in COCA A's long position.Coca Cola vs. MOBILE FACTORY INC | ||
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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