Correlation Between Century Aluminum and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Coca Cola 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 Century Aluminum and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and The Coca Cola, you can compare the effects of market volatilities on Century Aluminum and Coca Cola 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 Century Aluminum with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Coca Cola.
Diversification Opportunities for Century Aluminum and Coca Cola
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Century and Coca is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Century Aluminum 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 Century Aluminum are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Century Aluminum i.e., Century Aluminum and Coca Cola go up and down completely randomly.
Pair Corralation between Century Aluminum and Coca Cola
Given the investment horizon of 90 days Century Aluminum is expected to generate 1.29 times less return on investment than Coca Cola. In addition to that, Century Aluminum is 3.33 times more volatile than The Coca Cola. It trades about 0.02 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.09 per unit of volatility. If you would invest 6,272 in The Coca Cola on September 13, 2024 and sell it today you would earn a total of 101.50 from holding The Coca Cola or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. The Coca Cola
Performance |
| Timeline |
| Century Aluminum |
| Coca Cola |
Century Aluminum and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Coca Cola
The main advantage of trading using opposite Century Aluminum and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Century Aluminum vs. Fortitude Gold Corp | Century Aluminum vs. New Gold | Century Aluminum vs. Galiano Gold | Century Aluminum vs. GoldMining |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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