Correlation Between DICKS Sporting and Coca Cola

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

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

Diversification Opportunities for DICKS Sporting and Coca Cola

0.0

Correlation Coefficient

DICKS Sporting  Coca Cola

Pay attention - limited upside

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

Pair Corralation between DICKS Sporting and Coca Cola

Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 1.61 times more return on investment than Coca Cola. However, DICKS Sporting is 1.61 times more volatile than Coca Cola FEMSA SAB. It trades about 0.03 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.01 per unit of risk. If you would invest  19,717  in DICKS Sporting Goods on September 15, 2024 and sell it today you would earn a total of  953.00  from holding DICKS Sporting Goods or generate 4.83% return on investment over 90 days.

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

DICKS Sporting Goods  vs.  Coca Cola FEMSA SAB

DICKS Sporting Goods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DICKS Sporting Goods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DICKS Sporting may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Coca Cola FEMSA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola FEMSA SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Coca Cola is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DICKS Sporting and Coca Cola

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

The idea behind DICKS Sporting Goods and Coca Cola FEMSA SAB 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.