Correlation Between Coca Cola and Blue Water
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Blue Water 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 Blue Water 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 Blue Water Petroleum, you can compare the effects of market volatilities on Coca Cola and Blue Water 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 Blue Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Blue Water.
Diversification Opportunities for Coca Cola and Blue Water
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Blue is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Blue Water Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Water Petroleum 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 Blue Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Water Petroleum has no effect on the direction of Coca Cola i.e., Coca Cola and Blue Water go up and down completely randomly.
Pair Corralation between Coca Cola and Blue Water
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.08 times more return on investment than Blue Water. However, The Coca Cola is 12.86 times less risky than Blue Water. It trades about -0.06 of its potential returns per unit of risk. Blue Water Petroleum is currently generating about -0.06 per unit of risk. If you would invest 6,482 in The Coca Cola on September 1, 2024 and sell it today you would lose (74.00) from holding The Coca Cola or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Coca Cola vs. Blue Water Petroleum
Performance |
| Timeline |
| Coca Cola |
| Blue Water Petroleum |
Coca Cola and Blue Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Blue Water
The main advantage of trading using opposite Coca Cola and Blue Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Blue Water 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 Blue Water will offset losses from the drop in Blue Water's long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp | Coca Cola vs. Embotelladora Andina SA |
| Blue Water vs. Petroleo Brasileiro Petrobras | Blue Water vs. Equinor ASA ADR | Blue Water vs. Eni SpA ADR | Blue Water vs. YPF Sociedad Anonima |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |