Correlation Between Coca-Cola European and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Coca-Cola European 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 European 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 European Partners and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on Coca-Cola European 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 European with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca-Cola European and Coca Cola.
Diversification Opportunities for Coca-Cola European and Coca Cola
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca-Cola and Coca is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA 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 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 FEMSA has no effect on the direction of Coca-Cola European i.e., Coca-Cola European and Coca Cola go up and down completely randomly.
Pair Corralation between Coca-Cola European and Coca Cola
Assuming the 90 days horizon Coca Cola European Partners is expected to generate 0.9 times more return on investment than Coca Cola. However, Coca Cola European Partners is 1.11 times less risky than Coca Cola. It trades about 0.07 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.03 per unit of risk. If you would invest 4,803 in Coca Cola European Partners on September 29, 2024 and sell it today you would earn a total of 2,527 from holding Coca Cola European Partners or generate 52.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Coca Cola European Partners vs. Coca Cola FEMSA SAB
Performance |
| Timeline |
| Coca Cola European |
| Coca Cola FEMSA |
Coca-Cola European and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca-Cola European and Coca Cola
The main advantage of trading using opposite Coca-Cola European and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola European 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 European vs. Monster Beverage Corp | Coca-Cola European vs. Keurig Dr Pepper | Coca-Cola European vs. Coca Cola FEMSA SAB | Coca-Cola European vs. National Beverage Corp |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. Coca Cola European Partners | Coca Cola vs. National Beverage Corp |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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