Correlation Between Freedom Bank and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Freedom Bank 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 Freedom Bank and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and The Coca Cola, you can compare the effects of market volatilities on Freedom Bank 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 Freedom Bank with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Coca Cola.
Diversification Opportunities for Freedom Bank and Coca Cola
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Coca is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Freedom Bank 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 Freedom Bank of 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 Freedom Bank i.e., Freedom Bank and Coca Cola go up and down completely randomly.
Pair Corralation between Freedom Bank and Coca Cola
Given the investment horizon of 90 days Freedom Bank is expected to generate 2.14 times less return on investment than Coca Cola. In addition to that, Freedom Bank is 1.26 times more volatile than The Coca Cola. It trades about 0.03 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.08 per unit of volatility. If you would invest 5,484 in The Coca Cola on September 1, 2024 and sell it today you would earn a total of 924.00 from holding The Coca Cola or generate 16.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.67% |
| Values | Daily Returns |
Freedom Bank of vs. The Coca Cola
Performance |
| Timeline |
| Freedom Bank |
| Coca Cola |
Freedom Bank and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Coca Cola
The main advantage of trading using opposite Freedom Bank and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank 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.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. SCOR PK | Freedom Bank vs. Aquagold International | Freedom Bank vs. Thrivent High Yield |
| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp | Coca Cola vs. Embotelladora Andina 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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