Correlation Between Coca Cola and River
Can any of the company-specific risk be diversified away by investing in both Coca Cola and River 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 River 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 River and Mercantile, you can compare the effects of market volatilities on Coca Cola and River 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 River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and River.
Diversification Opportunities for Coca Cola and River
Very good diversification
The 3 months correlation between Coca and River is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Co and River and Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River and Mercantile 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 River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River and Mercantile has no effect on the direction of Coca Cola i.e., Coca Cola and River go up and down completely randomly.
Pair Corralation between Coca Cola and River
Assuming the 90 days trading horizon Coca Cola is expected to generate 1.5 times less return on investment than River. But when comparing it to its historical volatility, Coca Cola Co is 1.52 times less risky than River. It trades about 0.04 of its potential returns per unit of risk. River and Mercantile is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 15,825 in River and Mercantile on November 3, 2024 and sell it today you would earn a total of 1,825 from holding River and Mercantile or generate 11.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola Co vs. River and Mercantile
Performance |
| Timeline |
| Coca Cola |
| River and Mercantile |
Coca Cola and River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and River
The main advantage of trading using opposite Coca Cola and River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, River 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 River will offset losses from the drop in River's long position.| Coca Cola vs. Gruppo MutuiOnline SpA | Coca Cola vs. Delta Air Lines | Coca Cola vs. Porvair plc | Coca Cola vs. Metro Bank PLC |
| River vs. Fidelity National Information | River vs. Datalogic | River vs. Creo Medical Group | River vs. Advanced Medical Solutions |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stocks Directory Find actively traded stocks across global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |