Correlation Between Coca Cola and Fortune Bay
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Fortune Bay 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 Fortune Bay 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 Fortune Bay Corp, you can compare the effects of market volatilities on Coca Cola and Fortune Bay 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 Fortune Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Fortune Bay.
Diversification Opportunities for Coca Cola and Fortune Bay
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Fortune is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Fortune Bay Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Bay Corp 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 Fortune Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Bay Corp has no effect on the direction of Coca Cola i.e., Coca Cola and Fortune Bay go up and down completely randomly.
Pair Corralation between Coca Cola and Fortune Bay
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 13.91 times less return on investment than Fortune Bay. But when comparing it to its historical volatility, The Coca Cola is 9.15 times less risky than Fortune Bay. It trades about 0.02 of its potential returns per unit of risk. Fortune Bay Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Fortune Bay Corp on August 26, 2024 and sell it today you would lose (6.00) from holding Fortune Bay Corp or give up 24.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Fortune Bay Corp
Performance |
| Timeline |
| Coca Cola |
| Fortune Bay Corp |
Coca Cola and Fortune Bay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Fortune Bay
The main advantage of trading using opposite Coca Cola and Fortune Bay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Fortune Bay 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 Fortune Bay will offset losses from the drop in Fortune Bay's long position.The idea behind The Coca Cola and Fortune Bay Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fortune Bay vs. Ascendant Resources | Fortune Bay vs. Cantex Mine Development | Fortune Bay vs. Amarc Resources | Fortune Bay vs. Sterling Metals Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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