Correlation Between Coca Cola and IShares IBonds
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares IBonds 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 IBonds 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 iBonds Dec, you can compare the effects of market volatilities on Coca Cola and IShares IBonds 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 IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares IBonds.
Diversification Opportunities for Coca Cola and IShares IBonds
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares iBonds Dec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds Dec 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 IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds Dec has no effect on the direction of Coca Cola i.e., Coca Cola and IShares IBonds go up and down completely randomly.
Pair Corralation between Coca Cola and IShares IBonds
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the IShares IBonds. In addition to that, Coca Cola is 6.6 times more volatile than iShares iBonds Dec. It trades about -0.17 of its total potential returns per unit of risk. iShares iBonds Dec is currently generating about -0.06 per unit of volatility. If you would invest 2,230 in iShares iBonds Dec on August 25, 2024 and sell it today you would lose (11.00) from holding iShares iBonds Dec or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
The Coca Cola vs. iShares iBonds Dec
Performance |
| Timeline |
| Coca Cola |
| iShares iBonds Dec |
Coca Cola and IShares IBonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares IBonds
The main advantage of trading using opposite Coca Cola and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares IBonds 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 IBonds will offset losses from the drop in IShares IBonds' long position.| Coca Cola vs. Vita Coco | Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. National Beverage Corp | Coca Cola vs. Celsius Holdings |
| IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec |
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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