Correlation Between Coca-Cola European and National Beverage
Can any of the company-specific risk be diversified away by investing in both Coca-Cola European and National Beverage 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 European and National Beverage 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 National Beverage Corp, you can compare the effects of market volatilities on Coca-Cola European and National Beverage 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 European with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca-Cola European and National Beverage.
Diversification Opportunities for Coca-Cola European and National Beverage
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca-Cola and National is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Coca-Cola European 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Coca-Cola European i.e., Coca-Cola European and National Beverage go up and down completely randomly.
Pair Corralation between Coca-Cola European and National Beverage
Assuming the 90 days horizon Coca Cola European Partners is expected to generate 1.19 times more return on investment than National Beverage. However, Coca-Cola European is 1.19 times more volatile than National Beverage Corp. It trades about 0.0 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.22 per unit of risk. If you would invest 7,370 in Coca Cola European Partners on September 27, 2024 and sell it today you would lose (40.00) from holding Coca Cola European Partners or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola European Partners vs. National Beverage Corp
Performance |
| Timeline |
| Coca Cola European |
| National Beverage Corp |
Coca-Cola European and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca-Cola European and National Beverage
The main advantage of trading using opposite Coca-Cola European and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola European position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Coca-Cola European vs. The Coca Cola | Coca-Cola European vs. Monster Beverage Corp | Coca-Cola European vs. Keurig Dr Pepper | Coca-Cola European vs. Coca Cola FEMSA SAB |
| National Beverage vs. The Coca Cola | National Beverage vs. Monster Beverage Corp | National Beverage vs. Keurig Dr Pepper | National Beverage vs. Coca Cola European Partners |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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