Correlation Between Coca Cola and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both Coca Cola and Eaton Vance 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 Eaton Vance 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 Eaton Vance Tax, you can compare the effects of market volatilities on Coca Cola and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Eaton Vance.

Diversification Opportunities for Coca Cola and Eaton Vance

0.06

Correlation Coefficient

Coca Cola  Eaton Vance

Significant diversification

The 3 months correlation between Coca and Eaton is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Tax has no effect on the direction of Coca Cola i.e., Coca Cola and Eaton Vance go up and down completely randomly.

Pair Corralation between Coca Cola and Eaton Vance

Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.86 times more return on investment than Eaton Vance. However, Coca Cola is 1.86 times more volatile than Eaton Vance Tax. It trades about 0.14 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about -0.15 per unit of risk. If you would invest  6,408  in The Coca Cola on November 29, 2024 and sell it today you would earn a total of  672.00  from holding The Coca Cola or generate 10.49% return on investment over 90 days.

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

The Coca Cola  vs.  Eaton Vance Tax

Coca Cola

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Eaton Vance Tax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Tax has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coca Cola and Eaton Vance

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

The idea behind The Coca Cola and Eaton Vance Tax 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.