Correlation Between Coca Cola and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both Coca Cola and SPDR SSgA 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 SPDR SSgA 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 SPDR SSgA Ultra, you can compare the effects of market volatilities on Coca Cola and SPDR SSgA 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 SPDR SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and SPDR SSgA.
Diversification Opportunities for Coca Cola and SPDR SSgA
Very poor diversification
The 3 months correlation between Coca and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and SPDR SSgA Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Ultra 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 SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Ultra has no effect on the direction of Coca Cola i.e., Coca Cola and SPDR SSgA go up and down completely randomly.
Pair Corralation between Coca Cola and SPDR SSgA
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 13.14 times more return on investment than SPDR SSgA. However, Coca Cola is 13.14 times more volatile than SPDR SSgA Ultra. It trades about 0.14 of its potential returns per unit of risk. SPDR SSgA Ultra is currently generating about 0.24 per unit of risk. If you would invest 6,211 in The Coca Cola on December 26, 2024 and sell it today you would earn a total of 670.00 from holding The Coca Cola or generate 10.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
The Coca Cola vs. SPDR SSgA Ultra
Performance |
Timeline |
Coca Cola |
SPDR SSgA Ultra |
Coca Cola and SPDR SSgA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and SPDR SSgA
The main advantage of trading using opposite Coca Cola and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, SPDR SSgA 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 SPDR SSgA will offset losses from the drop in SPDR SSgA'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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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