Correlation Between Proficient Auto and Coca Cola

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

By analyzing existing cross correlation between Proficient Auto Logistics, and The Coca Cola, you can compare the effects of market volatilities on Proficient Auto and Coca Cola 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 Proficient Auto with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proficient Auto and Coca Cola.

Diversification Opportunities for Proficient Auto and Coca Cola

0.8

Correlation Coefficient

Proficient Auto  Coca Cola

Very poor diversification

The 3 months correlation between Proficient and Coca is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Proficient Auto Logistics, and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Proficient Auto 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 Proficient Auto Logistics, are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Proficient Auto i.e., Proficient Auto and Coca Cola go up and down completely randomly.

Pair Corralation between Proficient Auto and Coca Cola

Considering the 90-day investment horizon Proficient Auto Logistics, is expected to under-perform the Coca Cola. In addition to that, Proficient Auto is 2.25 times more volatile than The Coca Cola. It trades about -0.13 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.17 per unit of volatility. If you would invest  6,139  in The Coca Cola on September 19, 2024 and sell it today you would earn a total of  201.00  from holding The Coca Cola or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Proficient Auto Logistics,  vs.  The Coca Cola

Proficient Auto Logi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proficient Auto Logistics, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Proficient Auto and Coca Cola

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

The idea behind Proficient Auto Logistics, and The Coca Cola 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.