Correlation Between GM and Coca Cola
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By analyzing existing cross correlation between General Motors and Coca Cola Embonor SA, you can compare the effects of market volatilities on GM 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 GM with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Coca Cola.
Diversification Opportunities for GM and Coca Cola
Excellent diversification
The 3 months correlation between GM and Coca is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Coca Cola Embonor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Embonor and GM 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 General Motors 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 Embonor has no effect on the direction of GM i.e., GM and Coca Cola go up and down completely randomly.
Pair Corralation between GM and Coca Cola
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.79 times more return on investment than Coca Cola. However, GM is 1.79 times more volatile than Coca Cola Embonor SA. It trades about 0.02 of its potential returns per unit of risk. Coca Cola Embonor SA is currently generating about -0.03 per unit of risk. If you would invest 4,540 in General Motors on November 28, 2024 and sell it today you would earn a total of 131.00 from holding General Motors or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.91% |
| Values | Daily Returns |
General Motors vs. Coca Cola Embonor SA
Performance |
| Timeline |
| General Motors |
| Coca Cola Embonor |
GM and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Coca Cola
The main advantage of trading using opposite GM and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and Coca Cola Embonor SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Coca Cola vs. Coca Cola Embonor SA | Coca Cola vs. Aguas Andinas SA | Coca Cola vs. Parq Arauco | Coca Cola vs. Enel Generacin Chile |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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