Correlation Between Coca Cola and QNB Corp

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

Diversification Opportunities for Coca Cola and QNB Corp

-0.91

Correlation Coefficient

Coca Cola  QNB Corp

Pay attention - limited upside

The 3 months correlation between Coca and QNB is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Corp 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 QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Coca Cola i.e., Coca Cola and QNB Corp go up and down completely randomly.

Pair Corralation between Coca Cola and QNB Corp

Allowing for the 90-day total investment horizon Coca Cola is expected to generate 3.41 times less return on investment than QNB Corp. But when comparing it to its historical volatility, The Coca Cola is 1.53 times less risky than QNB Corp. It trades about 0.06 of its potential returns per unit of risk. QNB Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,406  in QNB Corp on September 5, 2024 and sell it today you would earn a total of  894.00  from holding QNB Corp or generate 37.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	87.5%
Values	Daily Returns

The Coca Cola  vs.  QNB Corp

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.

QNB Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in QNB Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, QNB Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Coca Cola and QNB Corp

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

The idea behind The Coca Cola and QNB Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.