Correlation Between Coca Cola and Ito En
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Ito En 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 and Ito En into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola Consolidated and Ito En, you can compare the effects of market volatilities on Coca Cola and Ito En 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 with a short position of Ito En. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Ito En.
Diversification Opportunities for Coca Cola and Ito En
Poor diversification
The 3 months correlation between Coca and Ito is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Consolidated and Ito En in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ito En and Coca Cola 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 Consolidated are associated (or correlated) with Ito En. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ito En has no effect on the direction of Coca Cola i.e., Coca Cola and Ito En go up and down completely randomly.
Pair Corralation between Coca Cola and Ito En
Given the investment horizon of 90 days Coca Cola Consolidated is expected to generate 1.04 times more return on investment than Ito En. However, Coca Cola is 1.04 times more volatile than Ito En. It trades about -0.01 of its potential returns per unit of risk. Ito En is currently generating about -0.15 per unit of risk. If you would invest 132,621 in Coca Cola Consolidated on September 2, 2024 and sell it today you would lose (2,192) from holding Coca Cola Consolidated or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola Consolidated vs. Ito En
Performance |
| Timeline |
| Coca Cola Consolidated |
| Ito En |
Coca Cola and Ito En Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Ito En
The main advantage of trading using opposite Coca Cola and Ito En positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Ito En 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 Ito En will offset losses from the drop in Ito En's long position.| Coca Cola vs. The Coca Cola | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Keurig Dr Pepper |
| Ito En vs. PepsiCo | Ito En vs. Coca Cola Consolidated | Ito En vs. Monster Beverage Corp | Ito En vs. Celsius Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |