Correlation Between Coca Cola and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Century Aluminum 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 Century Aluminum 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 Century Aluminum, you can compare the effects of market volatilities on Coca Cola and Century Aluminum 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 Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Century Aluminum.
Diversification Opportunities for Coca Cola and Century Aluminum
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Century is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum 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 Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Coca Cola i.e., Coca Cola and Century Aluminum go up and down completely randomly.
Pair Corralation between Coca Cola and Century Aluminum
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 18.08 times less return on investment than Century Aluminum. But when comparing it to its historical volatility, The Coca Cola is 4.75 times less risky than Century Aluminum. It trades about 0.02 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 875.00 in Century Aluminum on September 12, 2024 and sell it today you would earn a total of 1,341 from holding Century Aluminum or generate 153.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Century Aluminum
Performance |
| Timeline |
| Coca Cola |
| Century Aluminum |
Coca Cola and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Century Aluminum
The main advantage of trading using opposite Coca Cola and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum'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 |
| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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