Correlation Between Coca Cola and Exchange Bank
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Exchange Bank 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 Exchange Bank 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 Exchange Bank, you can compare the effects of market volatilities on Coca Cola and Exchange Bank 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 Exchange Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Exchange Bank.
Diversification Opportunities for Coca Cola and Exchange Bank
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coca and Exchange is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Exchange Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bank 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 Exchange Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bank has no effect on the direction of Coca Cola i.e., Coca Cola and Exchange Bank go up and down completely randomly.
Pair Corralation between Coca Cola and Exchange Bank
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.38 times more return on investment than Exchange Bank. However, The Coca Cola is 2.62 times less risky than Exchange Bank. It trades about 0.17 of its potential returns per unit of risk. Exchange Bank is currently generating about 0.0 per unit of risk. If you would invest 6,239 in The Coca Cola on December 18, 2024 and sell it today you would earn a total of 773.00 from holding The Coca Cola or generate 12.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Coca Cola vs. Exchange Bank
Performance |
Timeline |
Coca Cola |
Exchange Bank |
Coca Cola and Exchange Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and Exchange Bank
The main advantage of trading using opposite Coca Cola and Exchange Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Exchange Bank 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 Exchange Bank will offset losses from the drop in Exchange Bank's long position.Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
Exchange Bank vs. Foreign Trade Bank | Exchange Bank vs. Comerica | Exchange Bank vs. Delhi Bank Corp | Exchange Bank vs. CCSB Financial Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Commodity Directory Find actively traded commodities issued by global exchanges | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |