Correlation Between Coca Cola and Grey Cloak
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Grey Cloak 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 Grey Cloak 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 Grey Cloak Tech, you can compare the effects of market volatilities on Coca Cola and Grey Cloak 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 Grey Cloak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Grey Cloak.
Diversification Opportunities for Coca Cola and Grey Cloak
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and Grey is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Grey Cloak Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grey Cloak Tech 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 Grey Cloak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grey Cloak Tech has no effect on the direction of Coca Cola i.e., Coca Cola and Grey Cloak go up and down completely randomly.
Pair Corralation between Coca Cola and Grey Cloak
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.04 times more return on investment than Grey Cloak. However, The Coca Cola is 27.95 times less risky than Grey Cloak. It trades about -0.26 of its potential returns per unit of risk. Grey Cloak Tech is currently generating about -0.06 per unit of risk. If you would invest 6,730 in The Coca Cola on August 25, 2024 and sell it today you would lose (338.00) from holding The Coca Cola or give up 5.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Grey Cloak Tech
Performance |
| Timeline |
| Coca Cola |
| Grey Cloak Tech |
Coca Cola and Grey Cloak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Grey Cloak
The main advantage of trading using opposite Coca Cola and Grey Cloak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Grey Cloak 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 Grey Cloak will offset losses from the drop in Grey Cloak's long position.| Coca Cola vs. Vita Coco | Coca Cola vs. National Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Keurig Dr Pepper |
| Grey Cloak vs. ManifestSeven Holdings | Grey Cloak vs. Pure Harvest Cannabis | Grey Cloak vs. Ionic Brands Corp | Grey Cloak vs. CuraScientific 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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