Correlation Between Air Products and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and Coca Cola HBC, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Coca Cola.
Diversification Opportunities for Air Products and Coca Cola
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Coca is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Air Products 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 Air Products Chemicals 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 HBC has no effect on the direction of Air Products i.e., Air Products and Coca Cola go up and down completely randomly.
Pair Corralation between Air Products and Coca Cola
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 1.37 times more return on investment than Coca Cola. However, Air Products is 1.37 times more volatile than Coca Cola HBC. It trades about 0.38 of its potential returns per unit of risk. Coca Cola HBC is currently generating about 0.13 per unit of risk. If you would invest 30,594 in Air Products Chemicals on September 3, 2024 and sell it today you would earn a total of 2,698 from holding Air Products Chemicals or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products Chemicals vs. Coca Cola HBC
Performance |
| Timeline |
| Air Products Chemicals |
| Coca Cola HBC |
Air Products and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Coca Cola
The main advantage of trading using opposite Air Products and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. Morgan Advanced Materials | Air Products vs. Applied Materials | Air Products vs. Compagnie Plastic Omnium | Air Products vs. Spirent Communications plc |
| Coca Cola vs. Various Eateries PLC | Coca Cola vs. Eastman Chemical Co | Coca Cola vs. Lowland Investment Co | Coca Cola vs. Vitec Software Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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