Correlation Between Hill Street and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Hill Street 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 Hill Street and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hill Street Beverage and Coca Cola European Partners, you can compare the effects of market volatilities on Hill Street 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 Hill Street with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hill Street and Coca Cola.
Diversification Opportunities for Hill Street and Coca Cola
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hill and Coca is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hill Street Beverage 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 Hill Street 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 Hill Street Beverage 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 Hill Street i.e., Hill Street and Coca Cola go up and down completely randomly.
Pair Corralation between Hill Street and Coca Cola
Assuming the 90 days horizon Hill Street Beverage is expected to generate 5.45 times more return on investment than Coca Cola. However, Hill Street is 5.45 times more volatile than Coca Cola European Partners. It trades about 0.14 of its potential returns per unit of risk. Coca Cola European Partners is currently generating about 0.1 per unit of risk. If you would invest 17.00 in Hill Street Beverage on August 28, 2024 and sell it today you would earn a total of 3.00 from holding Hill Street Beverage or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hill Street Beverage vs. Coca Cola European Partners
Performance |
| Timeline |
| Hill Street Beverage |
| Coca Cola European |
Hill Street and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hill Street and Coca Cola
The main advantage of trading using opposite Hill Street and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hill Street 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.| Hill Street vs. Barfresh Food Group | Hill Street vs. Fbec Worldwide | Hill Street vs. Flow Beverage Corp | Hill Street vs. Eq Energy Drink |
| Coca Cola vs. Vita Coco | Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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