Correlation Between United Guardian and Coca Cola
Can any of the company-specific risk be diversified away by investing in both United Guardian 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 United Guardian and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and The Coca Cola, you can compare the effects of market volatilities on United Guardian 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 United Guardian with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Coca Cola.
Diversification Opportunities for United Guardian and Coca Cola
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Coca is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and United Guardian 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 United Guardian 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 United Guardian i.e., United Guardian and Coca Cola go up and down completely randomly.
Pair Corralation between United Guardian and Coca Cola
Allowing for the 90-day total investment horizon United Guardian is expected to generate 1.17 times less return on investment than Coca Cola. In addition to that, United Guardian is 1.53 times more volatile than The Coca Cola. It trades about 0.09 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.16 per unit of volatility. If you would invest 6,365 in The Coca Cola on December 1, 2024 and sell it today you would earn a total of 756.00 from holding The Coca Cola or generate 11.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Guardian vs. The Coca Cola
Performance |
Timeline |
United Guardian |
Coca Cola |
United Guardian and Coca Cola Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Guardian and Coca Cola
The main advantage of trading using opposite United Guardian and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian 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.United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Unity Bancorp |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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