Correlation Between Coca Cola and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Federated Hermes 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 Federated Hermes 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 Federated Hermes ETF, you can compare the effects of market volatilities on Coca Cola and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Federated Hermes.
Diversification Opportunities for Coca Cola and Federated Hermes
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Federated is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of Coca Cola i.e., Coca Cola and Federated Hermes go up and down completely randomly.
Pair Corralation between Coca Cola and Federated Hermes
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.39 times less return on investment than Federated Hermes. In addition to that, Coca Cola is 6.06 times more volatile than Federated Hermes ETF. It trades about 0.03 of its total potential returns per unit of risk. Federated Hermes ETF is currently generating about 0.23 per unit of volatility. If you would invest 2,225 in Federated Hermes ETF on September 3, 2024 and sell it today you would earn a total of 92.00 from holding Federated Hermes ETF or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Federated Hermes ETF
Performance |
| Timeline |
| Coca Cola |
| Federated Hermes ETF |
Coca Cola and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Federated Hermes
The main advantage of trading using opposite Coca Cola and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| Federated Hermes vs. iShares iBoxx Investment | Federated Hermes vs. SPDR Bloomberg High | Federated Hermes vs. iShares TIPS Bond | Federated Hermes vs. iShares 20 Year |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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