Correlation Between SoftBank Group and Coca Cola
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and Coca Cola Co, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Coca Cola.
Diversification Opportunities for SoftBank Group and Coca Cola
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SoftBank and Coca is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Coca Cola Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and SoftBank Group 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 SoftBank Group Corp 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 has no effect on the direction of SoftBank Group i.e., SoftBank Group and Coca Cola go up and down completely randomly.
Pair Corralation between SoftBank Group and Coca Cola
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 2.17 times more return on investment than Coca Cola. However, SoftBank Group is 2.17 times more volatile than Coca Cola Co. It trades about 0.32 of its potential returns per unit of risk. Coca Cola Co is currently generating about 0.2 per unit of risk. If you would invest 873,400 in SoftBank Group Corp on September 17, 2024 and sell it today you would earn a total of 59,500 from holding SoftBank Group Corp or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 61.9% |
| Values | Daily Returns |
SoftBank Group Corp vs. Coca Cola Co
Performance |
| Timeline |
| SoftBank Group Corp |
| Coca Cola |
SoftBank Group and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Coca Cola
The main advantage of trading using opposite SoftBank Group and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.| SoftBank Group vs. Toyota Motor Corp | SoftBank Group vs. OTP Bank Nyrt | SoftBank Group vs. Hershey Co | SoftBank Group vs. Humana Inc |
| Coca Cola vs. Toyota Motor Corp | Coca Cola vs. SoftBank Group Corp | Coca Cola vs. OTP Bank Nyrt | Coca Cola vs. Hershey 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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