Correlation Between Coca Cola and IREIT MarketVector

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

Diversification Opportunities for Coca Cola and IREIT MarketVector

0.67

Correlation Coefficient

Coca Cola  IREIT MarketVector

Poor diversification

The 3 months correlation between Coca and IREIT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iREIT MarketVector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iREIT MarketVector 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 IREIT MarketVector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iREIT MarketVector has no effect on the direction of Coca Cola i.e., Coca Cola and IREIT MarketVector go up and down completely randomly.

Pair Corralation between Coca Cola and IREIT MarketVector

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the IREIT MarketVector. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.11 times less risky than IREIT MarketVector. The stock trades about -0.17 of its potential returns per unit of risk. The iREIT MarketVector is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  2,186  in iREIT MarketVector on October 22, 2024 and sell it today you would lose (179.70) from holding iREIT MarketVector or give up 8.22% of portfolio value over 90 days.

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

The Coca Cola  vs.  iREIT MarketVector

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 fragile 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.

iREIT MarketVector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iREIT MarketVector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Coca Cola and IREIT MarketVector

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

The idea behind The Coca Cola and iREIT MarketVector 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.