Correlation Between Coca Cola and Primo Brands
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Primo Brands 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 Primo Brands 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 Primo Brands, you can compare the effects of market volatilities on Coca Cola and Primo Brands 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 Primo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Primo Brands.
Diversification Opportunities for Coca Cola and Primo Brands
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Primo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Consolidated and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands 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 Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Coca Cola i.e., Coca Cola and Primo Brands go up and down completely randomly.
Pair Corralation between Coca Cola and Primo Brands
Given the investment horizon of 90 days Coca Cola is expected to generate 1.22 times less return on investment than Primo Brands. In addition to that, Coca Cola is 1.31 times more volatile than Primo Brands. It trades about 0.12 of its total potential returns per unit of risk. Primo Brands is currently generating about 0.2 per unit of volatility. If you would invest 1,389 in Primo Brands on August 27, 2024 and sell it today you would earn a total of 1,503 from holding Primo Brands or generate 108.21% 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. Primo Brands
Performance |
| Timeline |
| Coca Cola Consolidated |
| Primo Brands |
Coca Cola and Primo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Primo Brands
The main advantage of trading using opposite Coca Cola and Primo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Primo Brands 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 Primo Brands will offset losses from the drop in Primo Brands' 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 |
| Primo Brands vs. The Coca Cola | Primo Brands vs. National Beverage Corp | Primo Brands vs. Keurig Dr Pepper | Primo Brands vs. Coca Cola Femsa SAB |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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