Correlation Between Primo Water and Coca Cola

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

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

Diversification Opportunities for Primo Water and Coca Cola

0.0

Correlation Coefficient

Primo Water  Coca Cola

Pay attention - limited upside

The 3 months correlation between Primo and Coca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Primo Water Corp and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European and Primo Water 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 Primo Water Corp 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 European has no effect on the direction of Primo Water i.e., Primo Water and Coca Cola go up and down completely randomly.

Pair Corralation between Primo Water and Coca Cola

If you would invest  7,648  in Coca Cola European Partners on December 27, 2024 and sell it today you would earn a total of  889.00  from holding Coca Cola European Partners or generate 11.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Primo Water Corp  vs.  Coca Cola European Partners

Primo Water Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Primo Water Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Primo Water is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Coca Cola European

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola European Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Primo Water and Coca Cola

The main advantage of trading using opposite Primo Water and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Water 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 Primo Water Corp and Coca Cola European Partners 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.