Correlation Between Coca Cola and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Coca Cola and ProShares Trust 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 ProShares Trust 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 ProShares Trust, you can compare the effects of market volatilities on Coca Cola and ProShares Trust 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 ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and ProShares Trust.
Diversification Opportunities for Coca Cola and ProShares Trust
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and ProShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares 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 ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Coca Cola i.e., Coca Cola and ProShares Trust go up and down completely randomly.
Pair Corralation between Coca Cola and ProShares Trust
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.08 times more return on investment than ProShares Trust. However, The Coca Cola is 12.83 times less risky than ProShares Trust. It trades about -0.09 of its potential returns per unit of risk. ProShares Trust is currently generating about -0.31 per unit of risk. If you would invest 6,556 in The Coca Cola on August 30, 2024 and sell it today you would lose (113.00) from holding The Coca Cola or give up 1.72% 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. ProShares Trust
Performance |
| Timeline |
| Coca Cola |
| ProShares Trust |
Coca Cola and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and ProShares Trust
The main advantage of trading using opposite Coca Cola and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, ProShares Trust 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 ProShares Trust will offset losses from the drop in ProShares Trust's long position.| Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola European Partners | Coca Cola vs. Capital Income Builder | Coca Cola vs. Direxion Daily FTSE |
| ProShares Trust vs. Vanguard Total Stock | ProShares Trust vs. SPDR SP 500 | ProShares Trust vs. iShares Core SP | ProShares Trust vs. Vanguard Total Bond |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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