Correlation Between Coca Cola and WisdomTree MidCap
Can any of the company-specific risk be diversified away by investing in both Coca Cola and WisdomTree MidCap 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 WisdomTree MidCap 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 WisdomTree MidCap Earnings, you can compare the effects of market volatilities on Coca Cola and WisdomTree MidCap 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 WisdomTree MidCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and WisdomTree MidCap.
Diversification Opportunities for Coca Cola and WisdomTree MidCap
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and WisdomTree is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and WisdomTree MidCap Earnings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree MidCap 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 WisdomTree MidCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree MidCap has no effect on the direction of Coca Cola i.e., Coca Cola and WisdomTree MidCap go up and down completely randomly.
Pair Corralation between Coca Cola and WisdomTree MidCap
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 3.45 times less return on investment than WisdomTree MidCap. But when comparing it to its historical volatility, The Coca Cola is 1.42 times less risky than WisdomTree MidCap. It trades about 0.04 of its potential returns per unit of risk. WisdomTree MidCap Earnings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,841 in WisdomTree MidCap Earnings on September 1, 2024 and sell it today you would earn a total of 923.00 from holding WisdomTree MidCap Earnings or generate 15.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
The Coca Cola vs. WisdomTree MidCap Earnings
Performance |
| Timeline |
| Coca Cola |
| WisdomTree MidCap |
Coca Cola and WisdomTree MidCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and WisdomTree MidCap
The main advantage of trading using opposite Coca Cola and WisdomTree MidCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, WisdomTree MidCap 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 WisdomTree MidCap will offset losses from the drop in WisdomTree MidCap's long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. National Beverage Corp | Coca Cola vs. Embotelladora Andina SA |
| WisdomTree MidCap vs. WisdomTree SmallCap Earnings | WisdomTree MidCap vs. WisdomTree Earnings 500 | WisdomTree MidCap vs. WisdomTree MidCap Dividend | WisdomTree MidCap vs. NXG NextGen Infrastructure |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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