Correlation Between Coca Cola and Bouygues
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Bouygues 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 Bouygues 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 Bouygues SA, you can compare the effects of market volatilities on Coca Cola and Bouygues 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 Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Bouygues.
Diversification Opportunities for Coca Cola and Bouygues
Poor diversification
The 3 months correlation between Coca and Bouygues is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA 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 Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of Coca Cola i.e., Coca Cola and Bouygues go up and down completely randomly.
Pair Corralation between Coca Cola and Bouygues
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.4 times more return on investment than Bouygues. However, The Coca Cola is 2.47 times less risky than Bouygues. It trades about 0.06 of its potential returns per unit of risk. Bouygues SA is currently generating about -0.05 per unit of risk. If you would invest 5,700 in The Coca Cola on September 2, 2024 and sell it today you would earn a total of 708.00 from holding The Coca Cola or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.58% |
| Values | Daily Returns |
The Coca Cola vs. Bouygues SA
Performance |
| Timeline |
| Coca Cola |
| Bouygues SA |
Coca Cola and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Bouygues
The main advantage of trading using opposite Coca Cola and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Bouygues 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 Bouygues will offset losses from the drop in Bouygues' 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 |
| Bouygues vs. Orion Group Holdings | Bouygues vs. Agrify Corp | Bouygues vs. Matrix Service Co | Bouygues vs. MYR Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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