Correlation Between Coca Cola and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares MSCI 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 IShares MSCI 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 iShares MSCI Brazil, you can compare the effects of market volatilities on Coca Cola and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares MSCI.
Diversification Opportunities for Coca Cola and IShares MSCI
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares MSCI Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Brazil 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Brazil has no effect on the direction of Coca Cola i.e., Coca Cola and IShares MSCI go up and down completely randomly.
Pair Corralation between Coca Cola and IShares MSCI
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the IShares MSCI. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.77 times less risky than IShares MSCI. The stock trades about -0.31 of its potential returns per unit of risk. The iShares MSCI Brazil is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,185 in iShares MSCI Brazil on August 24, 2024 and sell it today you would lose (49.00) from holding iShares MSCI Brazil or give up 4.14% 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. iShares MSCI Brazil
Performance |
| Timeline |
| Coca Cola |
| iShares MSCI Brazil |
Coca Cola and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares MSCI
The main advantage of trading using opposite Coca Cola and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. Eshallgo Class A | Coca Cola vs. Amtech Systems | Coca Cola vs. Gold Fields Ltd |
| IShares MSCI vs. iShares China Large Cap | IShares MSCI vs. iShares MSCI Mexico | IShares MSCI vs. iShares MSCI South | IShares MSCI vs. iShares MSCI Japan |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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