Correlation Between Coca-Cola FEMSA and Coca-Cola European
Can any of the company-specific risk be diversified away by investing in both Coca-Cola FEMSA and Coca-Cola European 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 European 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 European Partners, you can compare the effects of market volatilities on Coca-Cola FEMSA and Coca-Cola European 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 European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca-Cola FEMSA and Coca-Cola European.
Diversification Opportunities for Coca-Cola FEMSA and Coca-Cola European
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca-Cola and Coca-Cola is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European 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 European. 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 European has no effect on the direction of Coca-Cola FEMSA i.e., Coca-Cola FEMSA and Coca-Cola European go up and down completely randomly.
Pair Corralation between Coca-Cola FEMSA and Coca-Cola European
Assuming the 90 days trading horizon Coca Cola FEMSA SAB is expected to under-perform the Coca-Cola European. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola FEMSA SAB is 1.46 times less risky than Coca-Cola European. The stock trades about -0.09 of its potential returns per unit of risk. The Coca Cola European Partners is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,999 in Coca Cola European Partners on October 15, 2024 and sell it today you would earn a total of 231.00 from holding Coca Cola European Partners or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.36% |
| Values | Daily Returns |
Coca Cola FEMSA SAB vs. Coca Cola European Partners
Performance |
| Timeline |
| Coca Cola FEMSA |
| Coca Cola European |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Coca-Cola FEMSA and Coca-Cola European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca-Cola FEMSA and Coca-Cola European
The main advantage of trading using opposite Coca-Cola FEMSA and Coca-Cola European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola FEMSA position performs unexpectedly, Coca-Cola European 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 European will offset losses from the drop in Coca-Cola European's long position.| Coca-Cola FEMSA vs. ONWARD MEDICAL BV | Coca-Cola FEMSA vs. CREO MEDICAL GRP | Coca-Cola FEMSA vs. Advanced Medical Solutions | Coca-Cola FEMSA vs. Forsys Metals Corp |
| Coca-Cola European vs. Gold Road Resources | Coca-Cola European vs. PENN NATL GAMING | Coca-Cola European vs. BROADWIND ENRGY | Coca-Cola European vs. OURGAME INTHOLDL 00005 |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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