Correlation Between Coca Cola and Brembo SpA
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Brembo SpA 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 Brembo SpA 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 Brembo SpA, you can compare the effects of market volatilities on Coca Cola and Brembo SpA 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 Brembo SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Brembo SpA.
Diversification Opportunities for Coca Cola and Brembo SpA
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Brembo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Brembo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brembo SpA 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 Brembo SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brembo SpA has no effect on the direction of Coca Cola i.e., Coca Cola and Brembo SpA go up and down completely randomly.
Pair Corralation between Coca Cola and Brembo SpA
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.28 times more return on investment than Brembo SpA. However, The Coca Cola is 3.62 times less risky than Brembo SpA. It trades about 0.02 of its potential returns per unit of risk. Brembo SpA is currently generating about -0.01 per unit of risk. If you would invest 6,019 in The Coca Cola on September 3, 2024 and sell it today you would earn a total of 389.00 from holding The Coca Cola or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 61.82% |
| Values | Daily Returns |
The Coca Cola vs. Brembo SpA
Performance |
| Timeline |
| Coca Cola |
| Brembo SpA |
Coca Cola and Brembo SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Brembo SpA
The main advantage of trading using opposite Coca Cola and Brembo SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Brembo SpA 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 Brembo SpA will offset losses from the drop in Brembo SpA'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 |
| Brembo SpA vs. Compagnie Generale des | Brembo SpA vs. Bridgestone Corp ADR | Brembo SpA vs. Adient PLC | Brembo SpA vs. ECARX Holdings Class |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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