Correlation Between Spirent Communications and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Coca Cola HBC, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Coca Cola.
Diversification Opportunities for Spirent Communications and Coca Cola
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spirent and Coca is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Spirent Communications 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 Spirent Communications plc 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 HBC has no effect on the direction of Spirent Communications i.e., Spirent Communications and Coca Cola go up and down completely randomly.
Pair Corralation between Spirent Communications and Coca Cola
Assuming the 90 days horizon Spirent Communications is expected to generate 1.02 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Spirent Communications plc is 1.41 times less risky than Coca Cola. It trades about 0.15 of its potential returns per unit of risk. Coca Cola HBC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,286 in Coca Cola HBC on September 4, 2024 and sell it today you would earn a total of 98.00 from holding Coca Cola HBC or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Coca Cola HBC
Performance |
| Timeline |
| Spirent Communications |
| Coca Cola HBC |
Spirent Communications and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Coca Cola
The main advantage of trading using opposite Spirent Communications and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. BJs Restaurants | Spirent Communications vs. STMicroelectronics NV | Spirent Communications vs. Renesas Electronics | Spirent Communications vs. BYD ELECTRONIC |
| Coca Cola vs. Spirent Communications plc | Coca Cola vs. SK TELECOM TDADR | Coca Cola vs. Tower One Wireless | Coca Cola vs. Entravision Communications |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |