Correlation Between Coca Cola and CHS
Can any of the company-specific risk be diversified away by investing in both Coca Cola and CHS 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 CHS 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 CHS Inc CP, you can compare the effects of market volatilities on Coca Cola and CHS 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 CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and CHS.
Diversification Opportunities for Coca Cola and CHS
Poor diversification
The 3 months correlation between Coca and CHS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and CHS Inc CP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CP 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 CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CP has no effect on the direction of Coca Cola i.e., Coca Cola and CHS go up and down completely randomly.
Pair Corralation between Coca Cola and CHS
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.79 times more return on investment than CHS. However, The Coca Cola is 1.27 times less risky than CHS. It trades about 0.06 of its potential returns per unit of risk. CHS Inc CP is currently generating about -0.01 per unit of risk. If you would invest 5,709 in The Coca Cola on September 14, 2024 and sell it today you would earn a total of 671.50 from holding The Coca Cola or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Coca Cola vs. CHS Inc CP
Performance |
| Timeline |
| Coca Cola |
| CHS Inc CP |
Coca Cola and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and CHS
The main advantage of trading using opposite Coca Cola and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS'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 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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