Correlation Between Coca Cola and Tastemaker Acquisition

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

Diversification Opportunities for Coca Cola and Tastemaker Acquisition

-0.86

Correlation Coefficient

Coca Cola  Tastemaker Acquisition

Pay attention - limited upside

The 3 months correlation between Coca and Tastemaker is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Tastemaker Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tastemaker Acquisition 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 Tastemaker Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tastemaker Acquisition has no effect on the direction of Coca Cola i.e., Coca Cola and Tastemaker Acquisition go up and down completely randomly.

Pair Corralation between Coca Cola and Tastemaker Acquisition

Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.68 times less return on investment than Tastemaker Acquisition. In addition to that, Coca Cola is 2.62 times more volatile than Tastemaker Acquisition Corp. It trades about 0.02 of its total potential returns per unit of risk. Tastemaker Acquisition Corp is currently generating about 0.1 per unit of volatility. If you would invest  1,030  in Tastemaker Acquisition Corp on October 9, 2024 and sell it today you would earn a total of  43.00  from holding Tastemaker Acquisition Corp or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	26.26%
Values	Daily Returns

The Coca Cola  vs.  Tastemaker Acquisition 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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Tastemaker Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tastemaker Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Tastemaker Acquisition is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Coca Cola and Tastemaker Acquisition

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

The idea behind The Coca Cola and Tastemaker Acquisition 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..