Correlation Between Coca Cola and Dynavax Technologies

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Can any of the company-specific risk be diversified away by investing in both Coca Cola and Dynavax Technologies 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 Dynavax Technologies 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 Dynavax Technologies, you can compare the effects of market volatilities on Coca Cola and Dynavax Technologies 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 Dynavax Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Dynavax Technologies.

Diversification Opportunities for Coca Cola and Dynavax Technologies

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Coca and Dynavax is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Dynavax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynavax Technologies 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 Dynavax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynavax Technologies has no effect on the direction of Coca Cola i.e., Coca Cola and Dynavax Technologies go up and down completely randomly.

Pair Corralation between Coca Cola and Dynavax Technologies

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Dynavax Technologies. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 3.67 times less risky than Dynavax Technologies. The stock trades about -0.38 of its potential returns per unit of risk. The Dynavax Technologies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,099  in Dynavax Technologies on August 23, 2024 and sell it today you would earn a total of  137.00  from holding Dynavax Technologies or generate 12.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

The Coca Cola  vs.  Dynavax Technologies

 Performance 
       Timeline  
Coca Cola 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Dynavax Technologies 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Dynavax Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dynavax Technologies may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Coca Cola and Dynavax Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and Dynavax Technologies

The main advantage of trading using opposite Coca Cola and Dynavax Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Dynavax Technologies 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 Dynavax Technologies will offset losses from the drop in Dynavax Technologies' long position.
The idea behind The Coca Cola and Dynavax Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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