Correlation Between Commercial Vehicle and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and The Coca Cola, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Coca Cola.
Diversification Opportunities for Commercial Vehicle and Coca Cola
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commercial and Coca is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Commercial Vehicle 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 Commercial Vehicle Group 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 has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Coca Cola go up and down completely randomly.
Pair Corralation between Commercial Vehicle and Coca Cola
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the Coca Cola. In addition to that, Commercial Vehicle is 3.49 times more volatile than The Coca Cola. It trades about -0.15 of its total potential returns per unit of risk. The Coca Cola is currently generating about -0.12 per unit of volatility. If you would invest 6,516 in The Coca Cola on September 3, 2024 and sell it today you would lose (453.00) from holding The Coca Cola or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. The Coca Cola
Performance |
| Timeline |
| Commercial Vehicle |
| Coca Cola |
Commercial Vehicle and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and Coca Cola
The main advantage of trading using opposite Commercial Vehicle and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
| Coca Cola vs. IMPERIAL TOBACCO | Coca Cola vs. ALGOMA STEEL GROUP | Coca Cola vs. JAPAN TOBACCO UNSPADR12 | Coca Cola vs. Check Point Software |
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 CEOs Directory module to screen CEOs from public companies around the world.
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