Correlation Between Fevertree Drinks and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Coca Cola.
Diversification Opportunities for Fevertree Drinks and Coca Cola
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fevertree and Coca is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc 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 Fevertree Drinks 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 Fevertree Drinks Plc 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 Fevertree Drinks i.e., Fevertree Drinks and Coca Cola go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Coca Cola
Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the Coca Cola. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.48 times less risky than Coca Cola. The stock trades about -0.16 of its potential returns per unit of risk. The Coca Cola FEMSA SAB is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 775.00 in Coca Cola FEMSA SAB on August 31, 2024 and sell it today you would lose (35.00) from holding Coca Cola FEMSA SAB or give up 4.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Coca Cola FEMSA SAB
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Coca Cola FEMSA |
Fevertree Drinks and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Coca Cola
The main advantage of trading using opposite Fevertree Drinks and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. PICKN PAY STORES | Fevertree Drinks vs. Vastned Retail NV | Fevertree Drinks vs. COSTCO WHOLESALE CDR | Fevertree Drinks vs. UNITED RENTALS |
| Coca Cola vs. Yakult Honsha CoLtd | Coca Cola vs. Coca Cola HBC | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Britvic plc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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