Correlation Between Coca Cola and EDP -
Can any of the company-specific risk be diversified away by investing in both Coca Cola and EDP - 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 EDP - 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 EDP Energias, you can compare the effects of market volatilities on Coca Cola and EDP - 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 EDP -. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and EDP -.
Diversification Opportunities for Coca Cola and EDP -
Significant diversification
The 3 months correlation between Coca and EDP is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and EDP Energias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Energias 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 EDP -. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Energias has no effect on the direction of Coca Cola i.e., Coca Cola and EDP - go up and down completely randomly.
Pair Corralation between Coca Cola and EDP -
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.44 times more return on investment than EDP -. However, The Coca Cola is 2.26 times less risky than EDP -. It trades about 0.12 of its potential returns per unit of risk. EDP Energias is currently generating about -0.03 per unit of risk. If you would invest 6,171 in The Coca Cola on November 9, 2024 and sell it today you would earn a total of 165.00 from holding The Coca Cola or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. EDP Energias
Performance |
| Timeline |
| Coca Cola |
| EDP Energias |
Coca Cola and EDP - Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and EDP -
The main advantage of trading using opposite Coca Cola and EDP - positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, EDP - 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 EDP - will offset losses from the drop in EDP -'s long position.| Coca Cola vs. Great Western Minerals | Coca Cola vs. Enterprise Bancorp | Coca Cola vs. T Rowe Price | Coca Cola vs. Aviat Networks |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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