Correlation Between Coca Cola and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both Coca Cola and GameStop Corp 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 GameStop Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and GameStop Corp, you can compare the effects of market volatilities on Coca Cola and GameStop Corp 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 GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and GameStop Corp.
Diversification Opportunities for Coca Cola and GameStop Corp
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and GameStop is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp 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 The Coca Cola are associated (or correlated) with GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Coca Cola i.e., Coca Cola and GameStop Corp go up and down completely randomly.
Pair Corralation between Coca Cola and GameStop Corp
Assuming the 90 days trading horizon Coca Cola is expected to generate 9.89 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, The Coca Cola is 9.71 times less risky than GameStop Corp. It trades about 0.05 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,090 in GameStop Corp on September 1, 2024 and sell it today you would earn a total of 835.00 from holding GameStop Corp or generate 39.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. GameStop Corp
Performance |
| Timeline |
| Coca Cola |
| GameStop Corp |
Coca Cola and GameStop Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and GameStop Corp
The main advantage of trading using opposite Coca Cola and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, GameStop Corp 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 GameStop Corp will offset losses from the drop in GameStop Corp's long position.| Coca Cola vs. CarsalesCom | Coca Cola vs. Richardson Electronics | Coca Cola vs. Arrow Electronics | Coca Cola vs. Commercial Vehicle Group |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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