Correlation Between Coca Cola and Avvax
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Avvax 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 Avvax 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 Avvax, you can compare the effects of market volatilities on Coca Cola and Avvax 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 Avvax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Avvax.
Diversification Opportunities for Coca Cola and Avvax
Excellent diversification
The 3 months correlation between Coca and Avvax is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Avvax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avvax 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 Avvax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avvax has no effect on the direction of Coca Cola i.e., Coca Cola and Avvax go up and down completely randomly.
Pair Corralation between Coca Cola and Avvax
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 2.13 times more return on investment than Avvax. However, Coca Cola is 2.13 times more volatile than Avvax. It trades about 0.09 of its potential returns per unit of risk. Avvax is currently generating about 0.17 per unit of risk. If you would invest 6,272 in The Coca Cola on September 13, 2024 and sell it today you would earn a total of 101.50 from holding The Coca Cola or generate 1.62% 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. Avvax
Performance |
| Timeline |
| Coca Cola |
| Avvax |
Coca Cola and Avvax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Avvax
The main advantage of trading using opposite Coca Cola and Avvax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Avvax 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 Avvax will offset losses from the drop in Avvax'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 |
| Avvax vs. Calamos Dynamic Convertible | Avvax vs. Fidelity Sai Convertible | Avvax vs. Rationalpier 88 Convertible | Avvax vs. Putnam Convertible Incm Gwth |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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