Correlation Between Coca Cola and Avantis Small
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Avantis Small 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 Avantis Small 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 Avantis Small Cap, you can compare the effects of market volatilities on Coca Cola and Avantis Small 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 Avantis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Avantis Small.
Diversification Opportunities for Coca Cola and Avantis Small
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Avantis is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Avantis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Small Cap 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 Avantis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Small Cap has no effect on the direction of Coca Cola i.e., Coca Cola and Avantis Small go up and down completely randomly.
Pair Corralation between Coca Cola and Avantis Small
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 4.52 times less return on investment than Avantis Small. But when comparing it to its historical volatility, The Coca Cola is 1.64 times less risky than Avantis Small. It trades about 0.02 of its potential returns per unit of risk. Avantis Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,305 in Avantis Small Cap on August 30, 2024 and sell it today you would earn a total of 3,223 from holding Avantis Small Cap or generate 44.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Avantis Small Cap
Performance |
| Timeline |
| Coca Cola |
| Avantis Small Cap |
Coca Cola and Avantis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Avantis Small
The main advantage of trading using opposite Coca Cola and Avantis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Avantis Small 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 Avantis Small will offset losses from the drop in Avantis Small's long position.| Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. PepsiCo | Coca Cola vs. Coca Cola Femsa SAB |
| Avantis Small vs. Dimensional ETF Trust | Avantis Small vs. Vanguard Small Cap Index | Avantis Small vs. First Trust Multi Manager | Avantis Small vs. Vanguard SP Small Cap |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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