Correlation Between Coca Cola and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Lexinfintech Holdings 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 Lexinfintech Holdings 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 Lexinfintech Holdings, you can compare the effects of market volatilities on Coca Cola and Lexinfintech Holdings 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 Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Lexinfintech Holdings.
Diversification Opportunities for Coca Cola and Lexinfintech Holdings
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Lexinfintech is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Consolidated and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of Coca Cola i.e., Coca Cola and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between Coca Cola and Lexinfintech Holdings
Given the investment horizon of 90 days Coca Cola Consolidated is expected to under-perform the Lexinfintech Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola Consolidated is 2.71 times less risky than Lexinfintech Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The Lexinfintech Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 320.00 in Lexinfintech Holdings on August 24, 2024 and sell it today you would earn a total of 10.00 from holding Lexinfintech Holdings or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola Consolidated vs. Lexinfintech Holdings
Performance |
| Timeline |
| Coca Cola Consolidated |
| Lexinfintech Holdings |
Coca Cola and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Lexinfintech Holdings
The main advantage of trading using opposite Coca Cola and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' 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 |
| Lexinfintech Holdings vs. Visa Class A | Lexinfintech Holdings vs. Mastercard | Lexinfintech Holdings vs. SoFi Technologies | Lexinfintech Holdings vs. Coca Cola Consolidated |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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