Correlation Between Coca Cola and Paccar
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Paccar 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 Coca Cola and Paccar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola Co and Paccar Inc, you can compare the effects of market volatilities on Coca Cola and Paccar 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 Coca Cola with a short position of Paccar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Paccar.
Diversification Opportunities for Coca Cola and Paccar
Pay attention - limited upside
The 3 months correlation between Coca and Paccar is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Co and Paccar Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paccar Inc and Coca Cola 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 Coca Cola Co are associated (or correlated) with Paccar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paccar Inc has no effect on the direction of Coca Cola i.e., Coca Cola and Paccar go up and down completely randomly.
Pair Corralation between Coca Cola and Paccar
Assuming the 90 days trading horizon Coca Cola Co is expected to under-perform the Paccar. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola Co is 2.71 times less risky than Paccar. The stock trades about -0.07 of its potential returns per unit of risk. The Paccar Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 10,394 in Paccar Inc on September 1, 2024 and sell it today you would earn a total of 1,306 from holding Paccar Inc or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Coca Cola Co vs. Paccar Inc
Performance |
| Timeline |
| Coca Cola |
| Paccar Inc |
Coca Cola and Paccar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Paccar
The main advantage of trading using opposite Coca Cola and Paccar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Paccar 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 Paccar will offset losses from the drop in Paccar's long position.| Coca Cola vs. Thor Mining PLC | Coca Cola vs. Dentsply Sirona | Coca Cola vs. Zanaga Iron Ore | Coca Cola vs. Ironveld Plc |
| Paccar vs. Sligro Food Group | Paccar vs. Spirent Communications plc | Paccar vs. Leroy Seafood Group | Paccar vs. Roebuck Food 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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