Correlation Between Coca Cola and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Horizon Active 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 Coca Cola and Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Horizon Active Risk, you can compare the effects of market volatilities on Coca Cola and Horizon Active 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 Coca Cola with a short position of Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Horizon Active.
Diversification Opportunities for Coca Cola and Horizon Active
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Horizon is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Horizon Active Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Risk and Coca Cola 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 The Coca Cola are associated (or correlated) with Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Risk has no effect on the direction of Coca Cola i.e., Coca Cola and Horizon Active go up and down completely randomly.
Pair Corralation between Coca Cola and Horizon Active
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Horizon Active. In addition to that, Coca Cola is 1.37 times more volatile than Horizon Active Risk. It trades about -0.17 of its total potential returns per unit of risk. Horizon Active Risk is currently generating about 0.07 per unit of volatility. If you would invest 2,710 in Horizon Active Risk on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Horizon Active Risk or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Horizon Active Risk
Performance |
| Timeline |
| Coca Cola |
| Horizon Active Risk |
Coca Cola and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Horizon Active
The main advantage of trading using opposite Coca Cola and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| Horizon Active vs. Horizon Active Asset | Horizon Active vs. Horizon Active Dividend | Horizon Active vs. Horizon Defined Risk | Horizon Active vs. Horizon Defensive Equity |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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