Correlation Between Grand Canyon and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Grand Canyon 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 Grand Canyon and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and Coca Cola European Partners, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Coca Cola.
Diversification Opportunities for Grand Canyon and Coca Cola
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grand and Coca is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education 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 Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and Coca Cola go up and down completely randomly.
Pair Corralation between Grand Canyon and Coca Cola
Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 0.78 times more return on investment than Coca Cola. However, Grand Canyon Education is 1.28 times less risky than Coca Cola. It trades about 0.21 of its potential returns per unit of risk. Coca Cola European Partners is currently generating about 0.06 per unit of risk. If you would invest 15,500 in Grand Canyon Education on October 31, 2024 and sell it today you would earn a total of 900.00 from holding Grand Canyon Education or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Grand Canyon Education vs. Coca Cola European Partners
Performance |
| Timeline |
| Grand Canyon Education |
| Coca Cola European |
Grand Canyon and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and Coca Cola
The main advantage of trading using opposite Grand Canyon and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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.| Grand Canyon vs. LG Display Co | Grand Canyon vs. PLAYTIKA HOLDING DL 01 | Grand Canyon vs. PLAYMATES TOYS | Grand Canyon vs. Mitsui Chemicals |
| Coca Cola vs. SAFEROADS HLDGS | Coca Cola vs. GEELY AUTOMOBILE | Coca Cola vs. ecotel communication ag | Coca Cola vs. Gaztransport Technigaz 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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