Correlation Between Hasbro and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Hasbro 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 Hasbro and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and The Coca Cola, you can compare the effects of market volatilities on Hasbro 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 Hasbro with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Coca Cola.
Diversification Opportunities for Hasbro and Coca Cola
Very poor diversification
The 3 months correlation between Hasbro and Coca is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Hasbro 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 Hasbro Inc 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 Hasbro i.e., Hasbro and Coca Cola go up and down completely randomly.
Pair Corralation between Hasbro and Coca Cola
Considering the 90-day investment horizon Hasbro Inc is expected to generate 1.85 times more return on investment than Coca Cola. However, Hasbro is 1.85 times more volatile than The Coca Cola. It trades about 0.01 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.09 per unit of risk. If you would invest 6,531 in Hasbro Inc on September 5, 2024 and sell it today you would earn a total of 1.00 from holding Hasbro Inc or generate 0.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hasbro Inc vs. The Coca Cola
Performance |
| Timeline |
| Hasbro Inc |
| Coca Cola |
Hasbro and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and Coca Cola
The main advantage of trading using opposite Hasbro and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro 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.| Hasbro vs. Thor Industries | Hasbro vs. EZGO Technologies | Hasbro vs. Polaris Industries | Hasbro vs. LCI Industries |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
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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