Correlation Between Coca Cola and Endurance Motive
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Endurance Motive 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 Endurance Motive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola European Partners and Endurance Motive SA, you can compare the effects of market volatilities on Coca Cola and Endurance Motive 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 Endurance Motive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Endurance Motive.
Diversification Opportunities for Coca Cola and Endurance Motive
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coca and Endurance is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and Endurance Motive SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endurance Motive 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 European Partners are associated (or correlated) with Endurance Motive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endurance Motive has no effect on the direction of Coca Cola i.e., Coca Cola and Endurance Motive go up and down completely randomly.
Pair Corralation between Coca Cola and Endurance Motive
Assuming the 90 days trading horizon Coca Cola European Partners is expected to generate 0.83 times more return on investment than Endurance Motive. However, Coca Cola European Partners is 1.2 times less risky than Endurance Motive. It trades about -0.01 of its potential returns per unit of risk. Endurance Motive SA is currently generating about -0.26 per unit of risk. If you would invest 7,900 in Coca Cola European Partners on January 23, 2025 and sell it today you would lose (70.00) from holding Coca Cola European Partners or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola European Partners vs. Endurance Motive SA
Performance |
| Timeline |
| Coca Cola European |
| Endurance Motive |
Coca Cola and Endurance Motive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Endurance Motive
The main advantage of trading using opposite Coca Cola and Endurance Motive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Endurance Motive 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 Endurance Motive will offset losses from the drop in Endurance Motive's long position.The idea behind Coca Cola European Partners and Endurance Motive SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Endurance Motive vs. Airbus Group SE | Endurance Motive vs. Industria de Diseno | Endurance Motive vs. Vale SA | Endurance Motive vs. Iberdrola SA |
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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