Correlation Between Coca Cola and Various Eateries
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Various Eateries 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 Various Eateries 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 Various Eateries PLC, you can compare the effects of market volatilities on Coca Cola and Various Eateries 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 Various Eateries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Various Eateries.
Diversification Opportunities for Coca Cola and Various Eateries
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Coca and Various is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC and Various Eateries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Various Eateries 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 Various Eateries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Various Eateries PLC has no effect on the direction of Coca Cola i.e., Coca Cola and Various Eateries go up and down completely randomly.
Pair Corralation between Coca Cola and Various Eateries
Assuming the 90 days trading horizon Coca Cola HBC is expected to generate 2.83 times more return on investment than Various Eateries. However, Coca Cola is 2.83 times more volatile than Various Eateries PLC. It trades about -0.03 of its potential returns per unit of risk. Various Eateries PLC is currently generating about -0.12 per unit of risk. If you would invest 281,600 in Coca Cola HBC on September 12, 2024 and sell it today you would lose (6,000) from holding Coca Cola HBC or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola HBC vs. Various Eateries PLC
Performance |
| Timeline |
| Coca Cola HBC |
| Various Eateries PLC |
Coca Cola and Various Eateries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Various Eateries
The main advantage of trading using opposite Coca Cola and Various Eateries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Various Eateries 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 Various Eateries will offset losses from the drop in Various Eateries' long position.| Coca Cola vs. Ross Stores | Coca Cola vs. Datagroup SE | Coca Cola vs. Taylor Maritime Investments | Coca Cola vs. Tyson Foods Cl |
| Various Eateries vs. National Atomic Co | Various Eateries vs. OTP Bank Nyrt | Various Eateries vs. Samsung Electronics Co | Various Eateries vs. Samsung Electronics Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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