Correlation Between Coca Cola and Biogen
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Biogen 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 Biogen 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 Biogen Inc, you can compare the effects of market volatilities on Coca Cola and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Biogen.
Diversification Opportunities for Coca Cola and Biogen
Poor diversification
The 3 months correlation between Coca and Biogen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Coca Cola i.e., Coca Cola and Biogen go up and down completely randomly.
Pair Corralation between Coca Cola and Biogen
Assuming the 90 days trading horizon Coca Cola FEMSA SAB is expected to generate 0.89 times more return on investment than Biogen. However, Coca Cola FEMSA SAB is 1.12 times less risky than Biogen. It trades about 0.02 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.07 per unit of risk. If you would invest 15,500 in Coca Cola FEMSA SAB on September 24, 2024 and sell it today you would earn a total of 441.00 from holding Coca Cola FEMSA SAB or generate 2.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.6% |
Values | Daily Returns |
Coca Cola FEMSA SAB vs. Biogen Inc
Performance |
Timeline |
Coca Cola FEMSA |
Biogen Inc |
Coca Cola and Biogen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and Biogen
The main advantage of trading using opposite Coca Cola and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.Coca Cola vs. Arca Continental SAB | Coca Cola vs. Wal Mart de Mxico | Coca Cola vs. Fomento Econmico Mexicano | Coca Cola vs. Orbia Advance |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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