Correlation Between Coca Cola and Medical Properties
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Medical Properties 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 Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Medical Properties Trust,, you can compare the effects of market volatilities on Coca Cola and Medical Properties 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 Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Medical Properties.
Diversification Opportunities for Coca Cola and Medical Properties
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Coca and Medical is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Medical Properties Trust, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust, 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 The Coca Cola are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust, has no effect on the direction of Coca Cola i.e., Coca Cola and Medical Properties go up and down completely randomly.
Pair Corralation between Coca Cola and Medical Properties
Assuming the 90 days trading horizon The Coca Cola is expected to generate 0.38 times more return on investment than Medical Properties. However, The Coca Cola is 2.61 times less risky than Medical Properties. It trades about -0.04 of its potential returns per unit of risk. Medical Properties Trust, is currently generating about -0.06 per unit of risk. If you would invest 6,332 in The Coca Cola on October 11, 2024 and sell it today you would lose (66.00) from holding The Coca Cola or give up 1.04% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Coca Cola vs. Medical Properties Trust,
Performance |
Timeline |
Coca Cola |
Medical Properties Trust, |
Coca Cola and Medical Properties Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and Medical Properties
The main advantage of trading using opposite Coca Cola and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' long position.Coca Cola vs. Medical Properties Trust, | Coca Cola vs. Public Storage | Coca Cola vs. Westinghouse Air Brake | Coca Cola vs. Check Point Software |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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