Correlation Between Coca Cola and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares Trust 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 Trust 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 Trust, you can compare the effects of market volatilities on Coca Cola and IShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares Trust.
Diversification Opportunities for Coca Cola and IShares Trust
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Coca Cola i.e., Coca Cola and IShares Trust go up and down completely randomly.
Pair Corralation between Coca Cola and IShares Trust
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the IShares Trust. In addition to that, Coca Cola is 1.48 times more volatile than iShares Trust. It trades about -0.04 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.13 per unit of volatility. If you would invest 2,571 in iShares Trust on September 3, 2024 and sell it today you would earn a total of 39.00 from holding iShares Trust or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. iShares Trust
Performance |
| Timeline |
| Coca Cola |
| iShares Trust |
Coca Cola and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares Trust
The main advantage of trading using opposite Coca Cola and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| IShares Trust vs. VanEck Vectors Moodys | IShares Trust vs. Xtrackers California Municipal | IShares Trust vs. Vanguard ESG Corporate | IShares Trust vs. Vanguard Intermediate Term Corporate |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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