Correlation Between Coca Cola and IShares Edge
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares Edge 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 IShares Edge 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 iShares Edge High, you can compare the effects of market volatilities on Coca Cola and IShares Edge 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 IShares Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares Edge.
Diversification Opportunities for Coca Cola and IShares Edge
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and IShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares Edge High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Edge High 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 IShares Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Edge High has no effect on the direction of Coca Cola i.e., Coca Cola and IShares Edge go up and down completely randomly.
Pair Corralation between Coca Cola and IShares Edge
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 2.43 times less return on investment than IShares Edge. In addition to that, Coca Cola is 2.09 times more volatile than iShares Edge High. It trades about 0.02 of its total potential returns per unit of risk. iShares Edge High is currently generating about 0.11 per unit of volatility. If you would invest 3,855 in iShares Edge High on August 30, 2024 and sell it today you would earn a total of 930.00 from holding iShares Edge High or generate 24.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. iShares Edge High
Performance |
| Timeline |
| Coca Cola |
| iShares Edge High |
Coca Cola and IShares Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares Edge
The main advantage of trading using opposite Coca Cola and IShares Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares Edge 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 IShares Edge will offset losses from the drop in IShares Edge'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 |
| IShares Edge vs. iShares Edge Investment | IShares Edge vs. iShares Intl High | IShares Edge vs. iShares JP Morgan |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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