Correlation Between Coca Cola and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Costco Wholesale 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 Costco Wholesale 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 Costco Wholesale Corp, you can compare the effects of market volatilities on Coca Cola and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Costco Wholesale.
Diversification Opportunities for Coca Cola and Costco Wholesale
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Costco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of Coca Cola i.e., Coca Cola and Costco Wholesale go up and down completely randomly.
Pair Corralation between Coca Cola and Costco Wholesale
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 2.02 times less return on investment than Costco Wholesale. In addition to that, Coca Cola is 1.0 times more volatile than Costco Wholesale Corp. It trades about 0.17 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.34 per unit of volatility. If you would invest 91,951 in Costco Wholesale Corp on September 18, 2024 and sell it today you would earn a total of 6,257 from holding Costco Wholesale Corp or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Costco Wholesale Corp
Performance |
| Timeline |
| Coca Cola |
| Costco Wholesale Corp |
Coca Cola and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Costco Wholesale
The main advantage of trading using opposite Coca Cola and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. Coca Cola European Partners | Coca Cola vs. Coca Cola Consolidated |
| Costco Wholesale vs. Walmart | Costco Wholesale vs. Dollar Tree | Costco Wholesale vs. BJs Wholesale Club | Costco Wholesale vs. Target |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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