Correlation Between Coca Cola and CP All
Can any of the company-specific risk be diversified away by investing in both Coca Cola and CP All 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 CP All 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 CP All PCL, you can compare the effects of market volatilities on Coca Cola and CP All 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 CP All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and CP All.
Diversification Opportunities for Coca Cola and CP All
Very good diversification
The 3 months correlation between Coca and CPPCY is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and CP All PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CP All PCL 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 CP All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CP All PCL has no effect on the direction of Coca Cola i.e., Coca Cola and CP All go up and down completely randomly.
Pair Corralation between Coca Cola and CP All
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the CP All. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 2.89 times less risky than CP All. The stock trades about -0.09 of its potential returns per unit of risk. The CP All PCL is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,711 in CP All PCL on September 5, 2024 and sell it today you would earn a total of 241.00 from holding CP All PCL or generate 14.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. CP All PCL
Performance |
| Timeline |
| Coca Cola |
| CP All PCL |
Coca Cola and CP All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and CP All
The main advantage of trading using opposite Coca Cola and CP All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, CP All 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 CP All will offset losses from the drop in CP All'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 |
| CP All vs. The Coca Cola | CP All vs. China Tontine Wines | CP All vs. Comstock Holding Companies | CP All vs. Vita Coco |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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