Correlation Between Coca Cola and Horizon Technology
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Horizon Technology 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 Horizon Technology 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 Horizon Technology Finance, you can compare the effects of market volatilities on Coca Cola and Horizon Technology 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 Horizon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Horizon Technology.
Diversification Opportunities for Coca Cola and Horizon Technology
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Horizon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Horizon Technology Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Technology 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 Horizon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Technology has no effect on the direction of Coca Cola i.e., Coca Cola and Horizon Technology go up and down completely randomly.
Pair Corralation between Coca Cola and Horizon Technology
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Horizon Technology. In addition to that, Coca Cola is 3.87 times more volatile than Horizon Technology Finance. It trades about -0.12 of its total potential returns per unit of risk. Horizon Technology Finance is currently generating about -0.05 per unit of volatility. If you would invest 2,461 in Horizon Technology Finance on August 31, 2024 and sell it today you would lose (6.00) from holding Horizon Technology Finance or give up 0.24% 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. Horizon Technology Finance
Performance |
| Timeline |
| Coca Cola |
| Horizon Technology |
Coca Cola and Horizon Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Horizon Technology
The main advantage of trading using opposite Coca Cola and Horizon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Horizon Technology 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 Horizon Technology will offset losses from the drop in Horizon Technology's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
| Horizon Technology vs. Kaltura | Horizon Technology vs. PennantPark Floating Rate | Horizon Technology vs. ServiceNow | Horizon Technology vs. Western Acquisition Ventures |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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