Correlation Between NVIDIA Corp and Coca Cola
Can any of the company-specific risk be diversified away by investing in both NVIDIA Corp 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 NVIDIA Corp and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA Corp and Coca Cola Co, you can compare the effects of market volatilities on NVIDIA Corp 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 NVIDIA Corp with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA Corp and Coca Cola.
Diversification Opportunities for NVIDIA Corp and Coca Cola
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NVIDIA and Coca is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA 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 NVIDIA Corp 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 NVIDIA 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 NVIDIA Corp i.e., NVIDIA Corp and Coca Cola go up and down completely randomly.
Pair Corralation between NVIDIA Corp and Coca Cola
Assuming the 90 days trading horizon NVIDIA Corp is expected to generate 3.58 times more return on investment than Coca Cola. However, NVIDIA Corp is 3.58 times more volatile than Coca Cola Co. It trades about 0.09 of its potential returns per unit of risk. Coca Cola Co is currently generating about 0.04 per unit of risk. If you would invest 6,939 in NVIDIA Corp on November 3, 2024 and sell it today you would earn a total of 5,783 from holding NVIDIA Corp or generate 83.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA Corp vs. Coca Cola Co
Performance |
| Timeline |
| NVIDIA Corp |
| Coca Cola |
NVIDIA Corp and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA Corp and Coca Cola
The main advantage of trading using opposite NVIDIA Corp and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA Corp 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.| NVIDIA Corp vs. First Class Metals | NVIDIA Corp vs. Adriatic Metals | NVIDIA Corp vs. Associated British Foods | NVIDIA Corp vs. Tyson Foods Cl |
| Coca Cola vs. Gruppo MutuiOnline SpA | Coca Cola vs. Delta Air Lines | Coca Cola vs. Porvair plc | Coca Cola vs. Metro Bank PLC |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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