Correlation Between Yellow Pages and Coca-Cola FEMSA
Can any of the company-specific risk be diversified away by investing in both Yellow Pages and Coca-Cola FEMSA 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 Yellow Pages and Coca-Cola FEMSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yellow Pages Limited and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on Yellow Pages and Coca-Cola FEMSA 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 Yellow Pages with a short position of Coca-Cola FEMSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and Coca-Cola FEMSA.
Diversification Opportunities for Yellow Pages and Coca-Cola FEMSA
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Yellow and Coca-Cola is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with Coca-Cola FEMSA. 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 FEMSA has no effect on the direction of Yellow Pages i.e., Yellow Pages and Coca-Cola FEMSA go up and down completely randomly.
Pair Corralation between Yellow Pages and Coca-Cola FEMSA
Assuming the 90 days horizon Yellow Pages Limited is expected to generate 0.88 times more return on investment than Coca-Cola FEMSA. However, Yellow Pages Limited is 1.13 times less risky than Coca-Cola FEMSA. It trades about 0.03 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.03 per unit of risk. If you would invest 741.00 in Yellow Pages Limited on December 7, 2024 and sell it today you would earn a total of 49.00 from holding Yellow Pages Limited or generate 6.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 34.1% |
Values | Daily Returns |
Yellow Pages Limited vs. Coca Cola FEMSA SAB
Performance |
Timeline |
Yellow Pages Limited |
Coca Cola FEMSA |
Yellow Pages and Coca-Cola FEMSA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yellow Pages and Coca-Cola FEMSA
The main advantage of trading using opposite Yellow Pages and Coca-Cola FEMSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yellow Pages position performs unexpectedly, Coca-Cola FEMSA 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 FEMSA will offset losses from the drop in Coca-Cola FEMSA's long position.Yellow Pages vs. Gannett Co | Yellow Pages vs. Scholastic | Yellow Pages vs. Pearson PLC ADR | Yellow Pages vs. John Wiley Sons |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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