Correlation Between Coca Cola and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares ESG 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 IShares ESG 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 iShares ESG Advanced, you can compare the effects of market volatilities on Coca Cola and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares ESG.
Diversification Opportunities for Coca Cola and IShares ESG
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Advanced has no effect on the direction of Coca Cola i.e., Coca Cola and IShares ESG go up and down completely randomly.
Pair Corralation between Coca Cola and IShares ESG
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.99 times more return on investment than IShares ESG. However, The Coca Cola is 1.01 times less risky than IShares ESG. It trades about -0.12 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about -0.13 per unit of risk. If you would invest 6,592 in The Coca Cola on August 31, 2024 and sell it today you would lose (149.00) from holding The Coca Cola or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. iShares ESG Advanced
Performance |
| Timeline |
| Coca Cola |
| iShares ESG Advanced |
Coca Cola and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares ESG
The main advantage of trading using opposite Coca Cola and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
| IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG MSCI | IShares ESG vs. iShares ESG Aware |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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