Correlation Between Coca Cola and Gold Reserve
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Gold Reserve 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 Gold Reserve 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 Gold Reserve, you can compare the effects of market volatilities on Coca Cola and Gold Reserve 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 Gold Reserve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Gold Reserve.
Diversification Opportunities for Coca Cola and Gold Reserve
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Gold is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Gold Reserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Reserve 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 Gold Reserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Reserve has no effect on the direction of Coca Cola i.e., Coca Cola and Gold Reserve go up and down completely randomly.
Pair Corralation between Coca Cola and Gold Reserve
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.2 times more return on investment than Gold Reserve. However, The Coca Cola is 5.12 times less risky than Gold Reserve. It trades about 0.03 of its potential returns per unit of risk. Gold Reserve is currently generating about 0.0 per unit of risk. If you would invest 5,963 in The Coca Cola on August 26, 2024 and sell it today you would earn a total of 429.00 from holding The Coca Cola or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Gold Reserve
Performance |
| Timeline |
| Coca Cola |
| Gold Reserve |
Coca Cola and Gold Reserve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Gold Reserve
The main advantage of trading using opposite Coca Cola and Gold Reserve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Gold Reserve 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 Gold Reserve will offset losses from the drop in Gold Reserve's long position.The idea behind The Coca Cola and Gold Reserve 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.| Gold Reserve vs. Monarch Mining | Gold Reserve vs. Lundin Gold | Gold Reserve vs. Liberty Gold Corp | Gold Reserve vs. Minera Alamos |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |