Correlation Between Elecnor SA and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Elecnor SA 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 Elecnor SA and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elecnor SA and Coca Cola European Partners, you can compare the effects of market volatilities on Elecnor SA 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 Elecnor SA with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elecnor SA and Coca Cola.
Diversification Opportunities for Elecnor SA and Coca Cola
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elecnor and Coca is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Elecnor SA and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European and Elecnor SA 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 Elecnor SA 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 European has no effect on the direction of Elecnor SA i.e., Elecnor SA and Coca Cola go up and down completely randomly.
Pair Corralation between Elecnor SA and Coca Cola
Assuming the 90 days trading horizon Elecnor SA is expected to generate 1.43 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Elecnor SA is 1.31 times less risky than Coca Cola. It trades about 0.1 of its potential returns per unit of risk. Coca Cola European Partners is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,181 in Coca Cola European Partners on August 28, 2024 and sell it today you would earn a total of 299.00 from holding Coca Cola European Partners or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elecnor SA vs. Coca Cola European Partners
Performance |
| Timeline |
| Elecnor SA |
| Coca Cola European |
Elecnor SA and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elecnor SA and Coca Cola
The main advantage of trading using opposite Elecnor SA and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elecnor SA 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.| Elecnor SA vs. Miquel y Costas | Elecnor SA vs. Construcciones y Auxiliar | Elecnor SA vs. CIE Automotive SA | Elecnor SA vs. Metrovacesa SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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