Correlation Between Coca Cola and IShares Expanded
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares Expanded 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 Expanded 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 Expanded Tech, you can compare the effects of market volatilities on Coca Cola and IShares Expanded 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 Expanded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares Expanded.
Diversification Opportunities for Coca Cola and IShares Expanded
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and IShares is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares Expanded Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Expanded 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 IShares Expanded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Expanded Tech has no effect on the direction of Coca Cola i.e., Coca Cola and IShares Expanded go up and down completely randomly.
Pair Corralation between Coca Cola and IShares Expanded
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the IShares Expanded. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.56 times less risky than IShares Expanded. The stock trades about -0.09 of its potential returns per unit of risk. The iShares Expanded Tech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,947 in iShares Expanded Tech on August 30, 2024 and sell it today you would earn a total of 99.00 from holding iShares Expanded Tech or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Coca Cola vs. iShares Expanded Tech
Performance |
| Timeline |
| Coca Cola |
| iShares Expanded Tech |
Coca Cola and IShares Expanded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares Expanded
The main advantage of trading using opposite Coca Cola and IShares Expanded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares Expanded 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 Expanded will offset losses from the drop in IShares Expanded's long position.| Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. PepsiCo | Coca Cola vs. Coca Cola Femsa SAB |
| IShares Expanded vs. iShares Global Tech | IShares Expanded vs. iShares Technology ETF | IShares Expanded vs. iShares Consumer Discretionary | IShares Expanded vs. iShares Expanded Tech Software |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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