Correlation Between Coca Cola and First National
Can any of the company-specific risk be diversified away by investing in both Coca Cola and First National 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 First National 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 First National of, you can compare the effects of market volatilities on Coca Cola and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and First National.
Diversification Opportunities for Coca Cola and First National
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and First is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and First National of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National has no effect on the direction of Coca Cola i.e., Coca Cola and First National go up and down completely randomly.
Pair Corralation between Coca Cola and First National
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the First National. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.37 times less risky than First National. The stock trades about -0.32 of its potential returns per unit of risk. The First National of is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,161,698 in First National of on August 24, 2024 and sell it today you would earn a total of 58,302 from holding First National of or generate 5.02% 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. First National of
Performance |
| Timeline |
| Coca Cola |
| First National |
Coca Cola and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and First National
The main advantage of trading using opposite Coca Cola and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Vita Coco |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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