Correlation Between Coca Cola and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Cresco Labs 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 Cresco Labs 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 Cresco Labs, you can compare the effects of market volatilities on Coca Cola and Cresco Labs 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 Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Cresco Labs.
Diversification Opportunities for Coca Cola and Cresco Labs
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Cresco is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs 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 Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Coca Cola i.e., Coca Cola and Cresco Labs go up and down completely randomly.
Pair Corralation between Coca Cola and Cresco Labs
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.16 times more return on investment than Cresco Labs. However, The Coca Cola is 6.27 times less risky than Cresco Labs. It trades about 0.04 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.01 per unit of risk. If you would invest 5,808 in The Coca Cola on January 9, 2025 and sell it today you would earn a total of 1,034 from holding The Coca Cola or generate 17.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
The Coca Cola vs. Cresco Labs
Performance |
| Timeline |
| Coca Cola |
| Cresco Labs |
Coca Cola and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Cresco Labs
The main advantage of trading using opposite Coca Cola and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Cresco Labs 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 Cresco Labs will offset losses from the drop in Cresco Labs' 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 |
| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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