Correlation Between Coca Cola and Northern Trust
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Northern 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 Northern 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 Northern Trust, you can compare the effects of market volatilities on Coca Cola and Northern 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 Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Northern Trust.
Diversification Opportunities for Coca Cola and Northern Trust
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Northern is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of Coca Cola i.e., Coca Cola and Northern Trust go up and down completely randomly.
Pair Corralation between Coca Cola and Northern Trust
If you would invest 5,661 in The Coca Cola on August 30, 2024 and sell it today you would earn a total of 782.00 from holding The Coca Cola or generate 13.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.32% |
| Values | Daily Returns |
The Coca Cola vs. Northern Trust
Performance |
| Timeline |
| Coca Cola |
| Northern Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Coca Cola and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Northern Trust
The main advantage of trading using opposite Coca Cola and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Northern 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 Northern Trust will offset losses from the drop in Northern 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 |
| Northern Trust vs. iShares Edge Investment | Northern Trust vs. iShares Intl High | Northern Trust vs. iShares JP Morgan |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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