Correlation Between Universal Insurance and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Universal Insurance 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 Universal Insurance and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on Universal Insurance 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 Universal Insurance with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Coca Cola.
Diversification Opportunities for Universal Insurance and Coca Cola
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Universal and Coca is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA and Universal Insurance 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 Universal Insurance Holdings 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 FEMSA has no effect on the direction of Universal Insurance i.e., Universal Insurance and Coca Cola go up and down completely randomly.
Pair Corralation between Universal Insurance and Coca Cola
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the Coca Cola. But the stock apears to be less risky and, when comparing its historical volatility, Universal Insurance Holdings is 2.42 times less risky than Coca Cola. The stock trades about -0.2 of its potential returns per unit of risk. The Coca Cola FEMSA SAB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 730.00 in Coca Cola FEMSA SAB on November 2, 2024 and sell it today you would earn a total of 15.00 from holding Coca Cola FEMSA SAB or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Coca Cola FEMSA SAB
Performance |
| Timeline |
| Universal Insurance |
| Coca Cola FEMSA |
Universal Insurance and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Coca Cola
The main advantage of trading using opposite Universal Insurance and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance 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.| Universal Insurance vs. Nomad Foods | Universal Insurance vs. WT OFFSHORE | Universal Insurance vs. GungHo Online Entertainment | Universal Insurance vs. United Natural Foods |
| Coca Cola vs. Align Technology | Coca Cola vs. Computershare Limited | Coca Cola vs. Vishay Intertechnology | Coca Cola vs. Alaska Air 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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