Correlation Between Coca Cola and Goodness Growth
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Goodness Growth 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 Goodness Growth 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 Goodness Growth Holdings, you can compare the effects of market volatilities on Coca Cola and Goodness Growth 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 Goodness Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Goodness Growth.
Diversification Opportunities for Coca Cola and Goodness Growth
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Goodness is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Coca Cola i.e., Coca Cola and Goodness Growth go up and down completely randomly.
Pair Corralation between Coca Cola and Goodness Growth
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.13 times more return on investment than Goodness Growth. However, The Coca Cola is 7.43 times less risky than Goodness Growth. It trades about -0.16 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about -0.17 per unit of risk. If you would invest 6,667 in The Coca Cola on August 29, 2024 and sell it today you would lose (212.00) from holding The Coca Cola or give up 3.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Goodness Growth Holdings
Performance |
| Timeline |
| Coca Cola |
| Goodness Growth Holdings |
Coca Cola and Goodness Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Goodness Growth
The main advantage of trading using opposite Coca Cola and Goodness Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Goodness Growth 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 Goodness Growth will offset losses from the drop in Goodness Growth's 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 |
| Goodness Growth vs. Verano Holdings Corp | Goodness Growth vs. Lowell Farms | Goodness Growth vs. Ascend Wellness Holdings | Goodness Growth vs. 4Front Ventures 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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