Correlation Between Coca Cola and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Eldorado Gold 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 Eldorado Gold 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 Eldorado Gold Corp, you can compare the effects of market volatilities on Coca Cola and Eldorado Gold 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 Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Eldorado Gold.
Diversification Opportunities for Coca Cola and Eldorado Gold
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Eldorado is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Coca Cola i.e., Coca Cola and Eldorado Gold go up and down completely randomly.
Pair Corralation between Coca Cola and Eldorado Gold
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.3 times more return on investment than Eldorado Gold. However, The Coca Cola is 3.38 times less risky than Eldorado Gold. It trades about -0.12 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.18 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Eldorado Gold Corp
Performance |
| Timeline |
| Coca Cola |
| Eldorado Gold Corp |
Coca Cola and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Eldorado Gold
The main advantage of trading using opposite Coca Cola and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Eldorado Gold 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 Eldorado Gold will offset losses from the drop in Eldorado Gold'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 |
| Eldorado Gold vs. Franco Nevada | Eldorado Gold vs. Alamos Gold | Eldorado Gold vs. Seabridge Gold | Eldorado Gold vs. Osisko Gold Ro |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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