Correlation Between Coca Cola and Future Fund
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Future Fund 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 Future Fund 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 The Future Fund, you can compare the effects of market volatilities on Coca Cola and Future Fund 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 Future Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Future Fund.
Diversification Opportunities for Coca Cola and Future Fund
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Coca and Future is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and The Future Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Fund 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 Future Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Fund has no effect on the direction of Coca Cola i.e., Coca Cola and Future Fund go up and down completely randomly.
Pair Corralation between Coca Cola and Future Fund
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.13 times more return on investment than Future Fund. However, Coca Cola is 1.13 times more volatile than The Future Fund. It trades about 0.17 of its potential returns per unit of risk. The Future Fund 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 Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Coca Cola vs. The Future Fund
Performance |
Timeline |
Coca Cola |
Future Fund |
Coca Cola and Future Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and Future Fund
The main advantage of trading using opposite Coca Cola and Future Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Future Fund 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 Future Fund will offset losses from the drop in Future Fund'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 |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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