Correlation Between Coca Cola and 62954HAL2

Can any of the company-specific risk be diversified away by investing in both Coca Cola and 62954HAL2 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 62954HAL2 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 NXPI 3125 15 FEB 42, you can compare the effects of market volatilities on Coca Cola and 62954HAL2 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 62954HAL2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and 62954HAL2.

Diversification Opportunities for Coca Cola and 62954HAL2

-0.01

Correlation Coefficient

Coca Cola  62954HAL2

Good diversification

The 3 months correlation between Coca and 62954HAL2 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and NXPI 3125 15 FEB 42 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXPI 3125 15 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 62954HAL2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXPI 3125 15 has no effect on the direction of Coca Cola i.e., Coca Cola and 62954HAL2 go up and down completely randomly.

Pair Corralation between Coca Cola and 62954HAL2

Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.83 times more return on investment than 62954HAL2. However, The Coca Cola is 1.21 times less risky than 62954HAL2. It trades about 0.18 of its potential returns per unit of risk. NXPI 3125 15 FEB 42 is currently generating about -0.12 per unit of risk. If you would invest  6,158  in The Coca Cola on December 28, 2024 and sell it today you would earn a total of  879.00  from holding The Coca Cola or generate 14.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.13%
Values	Daily Returns

The Coca Cola  vs.  NXPI 3125 15 FEB 42

Coca Cola

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Coca Cola displayed solid returns over the last few months and may actually be approaching a breakup point.

NXPI 3125 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days NXPI 3125 15 FEB 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NXPI 3125 15 FEB 42 investors.

Pair Trading with Coca Cola and 62954HAL2

The main advantage of trading using opposite Coca Cola and 62954HAL2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, 62954HAL2 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 62954HAL2 will offset losses from the drop in 62954HAL2's long position.

The idea behind The Coca Cola and NXPI 3125 15 FEB 42 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.