Correlation Between Coca Cola and Fbec Worldwide

Can any of the company-specific risk be diversified away by investing in both Coca Cola and Fbec Worldwide 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 Fbec Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coca Cola Femsa SAB and Fbec Worldwide, you can compare the effects of market volatilities on Coca Cola and Fbec Worldwide 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 Fbec Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Fbec Worldwide.

Diversification Opportunities for Coca Cola and Fbec Worldwide

0.02

Correlation Coefficient

Coca Cola  Fbec Worldwide

Significant diversification

The 3 months correlation between Coca and Fbec is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Femsa SAB and Fbec Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fbec Worldwide 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 Coca Cola Femsa SAB are associated (or correlated) with Fbec Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fbec Worldwide has no effect on the direction of Coca Cola i.e., Coca Cola and Fbec Worldwide go up and down completely randomly.

Pair Corralation between Coca Cola and Fbec Worldwide

Considering the 90-day investment horizon Coca Cola is expected to generate 580.75 times less return on investment than Fbec Worldwide. But when comparing it to its historical volatility, Coca Cola Femsa SAB is 60.46 times less risky than Fbec Worldwide. It trades about 0.01 of its potential returns per unit of risk. Fbec Worldwide is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Fbec Worldwide on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Fbec Worldwide or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.72%
Values	Daily Returns

Coca Cola Femsa SAB  vs.  Fbec Worldwide

Coca Cola Femsa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola Femsa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Coca Cola is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fbec Worldwide

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fbec Worldwide are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Fbec Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coca Cola and Fbec Worldwide

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

The idea behind Coca Cola Femsa SAB and Fbec Worldwide 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.