Correlation Between Coca-Cola FEMSA and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Coca-Cola FEMSA 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 Coca-Cola FEMSA and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola FEMSA SAB and Coca Cola HBC, you can compare the effects of market volatilities on Coca-Cola FEMSA 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 Coca-Cola FEMSA with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca-Cola FEMSA and Coca Cola.
Diversification Opportunities for Coca-Cola FEMSA and Coca Cola
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca-Cola and Coca is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Coca-Cola FEMSA 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 FEMSA SAB 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 HBC has no effect on the direction of Coca-Cola FEMSA i.e., Coca-Cola FEMSA and Coca Cola go up and down completely randomly.
Pair Corralation between Coca-Cola FEMSA and Coca Cola
Assuming the 90 days trading horizon Coca-Cola FEMSA is expected to generate 3.03 times less return on investment than Coca Cola. In addition to that, Coca-Cola FEMSA is 2.33 times more volatile than Coca Cola HBC. It trades about 0.08 of its total potential returns per unit of risk. Coca Cola HBC is currently generating about 0.55 per unit of volatility. If you would invest 3,332 in Coca Cola HBC on November 29, 2024 and sell it today you would earn a total of 876.00 from holding Coca Cola HBC or generate 26.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola FEMSA SAB vs. Coca Cola HBC
Performance |
| Timeline |
| Coca Cola FEMSA |
| Coca Cola HBC |
Coca-Cola FEMSA and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca-Cola FEMSA and Coca Cola
The main advantage of trading using opposite Coca-Cola FEMSA and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola FEMSA 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.| Coca-Cola FEMSA vs. ROYAL ROAD MIN | Coca-Cola FEMSA vs. Ribbon Communications | Coca-Cola FEMSA vs. EVS Broadcast Equipment | Coca-Cola FEMSA vs. Television Broadcasts Limited |
| Coca Cola vs. Sumitomo Mitsui Construction | Coca Cola vs. International Consolidated Airlines | Coca Cola vs. Australian Agricultural | Coca Cola vs. American Airlines Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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