Correlation Between Coca Cola and EA Series
Can any of the company-specific risk be diversified away by investing in both Coca Cola and EA Series 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 EA Series 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 EA Series Trust, you can compare the effects of market volatilities on Coca Cola and EA Series 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 EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and EA Series.
Diversification Opportunities for Coca Cola and EA Series
Excellent diversification
The 3 months correlation between Coca and ECML is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Coca Cola i.e., Coca Cola and EA Series go up and down completely randomly.
Pair Corralation between Coca Cola and EA Series
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the EA Series. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.42 times less risky than EA Series. The stock trades about -0.23 of its potential returns per unit of risk. The EA Series Trust is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,337 in EA Series Trust on August 26, 2024 and sell it today you would earn a total of 237.00 from holding EA Series Trust or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. EA Series Trust
Performance |
| Timeline |
| Coca Cola |
| EA Series Trust |
Coca Cola and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and EA Series
The main advantage of trading using opposite Coca Cola and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, EA Series 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 EA Series will offset losses from the drop in EA Series' long position.The idea behind The Coca Cola and EA Series Trust 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.| EA Series vs. Freedom Day Dividend | EA Series vs. Davis Select International | EA Series vs. iShares MSCI China | EA Series vs. SmartETFs Dividend Builder |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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