Correlation Between Coca Cola and Keurig Dr
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Keurig Dr 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 Keurig Dr 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 Keurig Dr Pepper, you can compare the effects of market volatilities on Coca Cola and Keurig Dr 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 Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Keurig Dr.
Diversification Opportunities for Coca Cola and Keurig Dr
Poor diversification
The 3 months correlation between Coca and Keurig is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Coca Cola i.e., Coca Cola and Keurig Dr go up and down completely randomly.
Pair Corralation between Coca Cola and Keurig Dr
Given the investment horizon of 90 days Coca Cola European Partners is expected to generate 0.7 times more return on investment than Keurig Dr. However, Coca Cola European Partners is 1.43 times less risky than Keurig Dr. It trades about 0.1 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.32 per unit of risk. If you would invest 7,616 in Coca Cola European Partners on August 24, 2024 and sell it today you would earn a total of 195.00 from holding Coca Cola European Partners or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola European Partners vs. Keurig Dr Pepper
Performance |
| Timeline |
| Coca Cola European |
| Keurig Dr Pepper |
Coca Cola and Keurig Dr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Keurig Dr
The main advantage of trading using opposite Coca Cola and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Keurig Dr 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 Keurig Dr will offset losses from the drop in Keurig Dr's long position.| Coca Cola vs. Vita Coco | Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp |
| Keurig Dr vs. Monster Beverage Corp | Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Coca Cola Femsa SAB | Keurig Dr vs. Vita Coco |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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