Correlation Between Coca-Cola Consolidated and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both Coca-Cola Consolidated and NAKED WINES 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 Consolidated and NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola Consolidated and NAKED WINES PLC, you can compare the effects of market volatilities on Coca-Cola Consolidated and NAKED WINES 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 Consolidated with a short position of NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca-Cola Consolidated and NAKED WINES.
Diversification Opportunities for Coca-Cola Consolidated and NAKED WINES
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca-Cola and NAKED is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Consolidated and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC and Coca-Cola Consolidated 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 Consolidated are associated (or correlated) with NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of Coca-Cola Consolidated i.e., Coca-Cola Consolidated and NAKED WINES go up and down completely randomly.
Pair Corralation between Coca-Cola Consolidated and NAKED WINES
Assuming the 90 days horizon Coca Cola Consolidated is expected to generate 0.56 times more return on investment than NAKED WINES. However, Coca Cola Consolidated is 1.77 times less risky than NAKED WINES. It trades about 0.07 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about 0.01 per unit of risk. If you would invest 113,531 in Coca Cola Consolidated on November 3, 2024 and sell it today you would earn a total of 17,469 from holding Coca Cola Consolidated or generate 15.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola Consolidated vs. NAKED WINES PLC
Performance |
| Timeline |
| Coca Cola Consolidated |
| NAKED WINES PLC |
Coca-Cola Consolidated and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca-Cola Consolidated and NAKED WINES
The main advantage of trading using opposite Coca-Cola Consolidated and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola Consolidated position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's long position.| Coca-Cola Consolidated vs. HAVERTY FURNITURE A | Coca-Cola Consolidated vs. American Homes 4 | Coca-Cola Consolidated vs. KENEDIX OFFICE INV | Coca-Cola Consolidated vs. The Home Depot |
| NAKED WINES vs. Heidelberg Materials AG | NAKED WINES vs. THRACE PLASTICS | NAKED WINES vs. Summit Materials | NAKED WINES vs. Sumitomo Rubber Industries |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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