Correlation Between Coca Cola and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Johnson Controls 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 Johnson Controls 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 Johnson Controls International, you can compare the effects of market volatilities on Coca Cola and Johnson Controls 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 Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Johnson Controls.
Diversification Opportunities for Coca Cola and Johnson Controls
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Johnson is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Co and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int 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 Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Coca Cola i.e., Coca Cola and Johnson Controls go up and down completely randomly.
Pair Corralation between Coca Cola and Johnson Controls
Assuming the 90 days trading horizon Coca Cola Co is expected to generate 0.53 times more return on investment than Johnson Controls. However, Coca Cola Co is 1.9 times less risky than Johnson Controls. It trades about 0.3 of its potential returns per unit of risk. Johnson Controls International is currently generating about 0.15 per unit of risk. If you would invest 6,505 in Coca Cola Co on November 28, 2024 and sell it today you would earn a total of 665.00 from holding Coca Cola Co or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Coca Cola Co vs. Johnson Controls International
Performance |
| Timeline |
| Coca Cola |
| Johnson Controls Int |
Coca Cola and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Johnson Controls
The main advantage of trading using opposite Coca Cola and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| Coca Cola vs. Ashtead Technology Holdings | Coca Cola vs. Bytes Technology | Coca Cola vs. Hollywood Bowl Group | Coca Cola vs. Grand Vision Media |
| Johnson Controls vs. Software Circle plc | Johnson Controls vs. Universal Music Group | Johnson Controls vs. Griffin Mining | Johnson Controls vs. Eastman Chemical Co |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |