Correlation Between Dow Jones and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Coca Cola Femsa SAB, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Coca Cola.
Diversification Opportunities for Dow Jones and Coca Cola
Very good diversification
The 3 months correlation between Dow and Coca is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Coca Cola go up and down completely randomly.
Pair Corralation between Dow Jones and Coca Cola
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.47 times more return on investment than Coca Cola. However, Dow Jones Industrial is 2.13 times less risky than Coca Cola. It trades about 0.09 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 3,389,102 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 1,040,549 from holding Dow Jones Industrial or generate 30.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Coca Cola Femsa SAB
Performance |
| Timeline |
Dow Jones and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Coca Cola Femsa SAB
Pair trading matchups for Coca Cola
Pair Trading with Dow Jones and Coca Cola
The main advantage of trading using opposite Dow Jones and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Coca Cola vs. Fomento Economico Mexicano | Coca Cola vs. Grupo Televisa SAB | Coca Cola vs. Grupo Aeroportuario del | Coca Cola vs. Grupo Aeroportuario del |
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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