Correlation Between Coca Cola and Gold
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Gold 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 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 And Gemstone, you can compare the effects of market volatilities on Coca Cola and Gold 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Gold.
Diversification Opportunities for Coca Cola and Gold
Poor diversification
The 3 months correlation between Coca and Gold is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Gold And Gemstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Gemstone 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Gemstone has no effect on the direction of Coca Cola i.e., Coca Cola and Gold go up and down completely randomly.
Pair Corralation between Coca Cola and Gold
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.06 times more return on investment than Gold. However, The Coca Cola is 16.81 times less risky than Gold. It trades about -0.12 of its potential returns per unit of risk. Gold And Gemstone is currently generating about -0.01 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 (176.00) from holding The Coca Cola or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Coca Cola vs. Gold And Gemstone
Performance |
| Timeline |
| Coca Cola |
| Gold And Gemstone |
Coca Cola and Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Gold
The main advantage of trading using opposite Coca Cola and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Gold 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 will offset losses from the drop in Gold's long position.| Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola European Partners | Coca Cola vs. Capital Income Builder | Coca Cola vs. Direxion Daily FTSE |
| Gold vs. Silver Hammer Mining | Gold vs. Reyna Silver Corp | Gold vs. Guanajuato Silver | Gold vs. Silver One Resources |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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