Correlation Between Coca Cola and WPLAU

Can any of the company-specific risk be diversified away by investing in both Coca Cola and WPLAU 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 WPLAU 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 WPLAU 37 15 MAR 28, you can compare the effects of market volatilities on Coca Cola and WPLAU 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 WPLAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and WPLAU.

Diversification Opportunities for Coca Cola and WPLAU

-0.78

Correlation Coefficient

Coca Cola  WPLAU

Pay attention - limited upside

The 3 months correlation between Coca and WPLAU is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and WPLAU 37 15 MAR 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPLAU 37 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 WPLAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPLAU 37 15 has no effect on the direction of Coca Cola i.e., Coca Cola and WPLAU go up and down completely randomly.

Pair Corralation between Coca Cola and WPLAU

Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.56 times more return on investment than WPLAU. However, Coca Cola is 1.56 times more volatile than WPLAU 37 15 MAR 28. It trades about 0.02 of its potential returns per unit of risk. WPLAU 37 15 MAR 28 is currently generating about -0.01 per unit of risk. If you would invest  5,922  in The Coca Cola on September 21, 2024 and sell it today you would earn a total of  323.00  from holding The Coca Cola or generate 5.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	13.33%
Values	Daily Returns

The Coca Cola  vs.  WPLAU 37 15 MAR 28

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

WPLAU 37 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WPLAU 37 15 MAR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 WPLAU 37 15 MAR 28 investors.

Pair Trading with Coca Cola and WPLAU

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

The idea behind The Coca Cola and WPLAU 37 15 MAR 28 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.