Correlation Between PREMIER FOODS and Coca Cola
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS 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 PREMIER FOODS and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Coca Cola HBC, you can compare the effects of market volatilities on PREMIER FOODS 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 PREMIER FOODS with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Coca Cola.
Diversification Opportunities for PREMIER FOODS and Coca Cola
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PREMIER and Coca is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and PREMIER FOODS 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 PREMIER FOODS 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 HBC has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and Coca Cola go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Coca Cola
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.93 times more return on investment than Coca Cola. However, PREMIER FOODS is 1.07 times less risky than Coca Cola. It trades about 0.12 of its potential returns per unit of risk. Coca Cola HBC is currently generating about 0.08 per unit of risk. If you would invest 153.00 in PREMIER FOODS on September 14, 2024 and sell it today you would earn a total of 77.00 from holding PREMIER FOODS or generate 50.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Coca Cola HBC
Performance |
| Timeline |
| PREMIER FOODS |
| Coca Cola HBC |
PREMIER FOODS and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Coca Cola
The main advantage of trading using opposite PREMIER FOODS and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS 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.| PREMIER FOODS vs. Federal Agricultural Mortgage | PREMIER FOODS vs. DAIRY FARM INTL | PREMIER FOODS vs. Sterling Construction | PREMIER FOODS vs. CITY OFFICE REIT |
| Coca Cola vs. Darden Restaurants | Coca Cola vs. Entravision Communications | Coca Cola vs. Verizon Communications | Coca Cola vs. Zoom Video Communications |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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