Correlation Between Coca Cola and Britvic Plc
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Britvic Plc 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 Britvic Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola HBC and Britvic plc, you can compare the effects of market volatilities on Coca Cola and Britvic Plc 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 Britvic Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Britvic Plc.
Diversification Opportunities for Coca Cola and Britvic Plc
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coca and Britvic is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC and Britvic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Britvic plc 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 HBC are associated (or correlated) with Britvic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Britvic plc has no effect on the direction of Coca Cola i.e., Coca Cola and Britvic Plc go up and down completely randomly.
Pair Corralation between Coca Cola and Britvic Plc
Assuming the 90 days horizon Coca Cola is expected to generate 3.28 times less return on investment than Britvic Plc. In addition to that, Coca Cola is 3.98 times more volatile than Britvic plc. It trades about 0.01 of its total potential returns per unit of risk. Britvic plc is currently generating about 0.08 per unit of volatility. If you would invest 1,500 in Britvic plc on September 2, 2024 and sell it today you would earn a total of 30.00 from holding Britvic plc or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola HBC vs. Britvic plc
Performance |
| Timeline |
| Coca Cola HBC |
| Britvic plc |
Coca Cola and Britvic Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Britvic Plc
The main advantage of trading using opposite Coca Cola and Britvic Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Britvic Plc 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 Britvic Plc will offset losses from the drop in Britvic Plc's long position.| Coca Cola vs. CODERE ONLINE LUX | Coca Cola vs. YATRA ONLINE DL 0001 | Coca Cola vs. Compagnie Plastic Omnium | Coca Cola vs. Hyster Yale Materials Handling |
| Britvic Plc vs. Yakult Honsha CoLtd | Britvic Plc vs. Coca Cola HBC | Britvic Plc vs. Coca Cola Consolidated | Britvic Plc vs. Fevertree Drinks 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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