Correlation Between Funko and Coca Cola

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

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

Diversification Opportunities for Funko and Coca Cola

0.61

Correlation Coefficient

Funko  Coca Cola

Poor diversification

The 3 months correlation between Funko and Coca is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Funko 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 Funko Inc 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 has no effect on the direction of Funko i.e., Funko and Coca Cola go up and down completely randomly.

Pair Corralation between Funko and Coca Cola

Given the investment horizon of 90 days Funko Inc is expected to generate 3.15 times more return on investment than Coca Cola. However, Funko is 3.15 times more volatile than The Coca Cola. It trades about 0.04 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.23 per unit of risk. If you would invest  1,199  in Funko Inc on September 21, 2024 and sell it today you would earn a total of  49.00  from holding Funko Inc or generate 4.09% return on investment over 90 days.

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

Funko Inc  vs.  The Coca Cola

Funko Inc

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Funko is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Funko and Coca Cola

The main advantage of trading using opposite Funko and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko 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 Funko Inc and The Coca Cola 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.