Correlation Between Coca Cola and Columbia India
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Columbia India 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 Columbia India 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 Columbia India Consumer, you can compare the effects of market volatilities on Coca Cola and Columbia India 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 Columbia India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Columbia India.
Diversification Opportunities for Coca Cola and Columbia India
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Coca and Columbia is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Columbia India Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia India Consumer 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 Columbia India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia India Consumer has no effect on the direction of Coca Cola i.e., Coca Cola and Columbia India go up and down completely randomly.
Pair Corralation between Coca Cola and Columbia India
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 4.85 times less return on investment than Columbia India. In addition to that, Coca Cola is 1.03 times more volatile than Columbia India Consumer. It trades about 0.02 of its total potential returns per unit of risk. Columbia India Consumer is currently generating about 0.11 per unit of volatility. If you would invest 4,490 in Columbia India Consumer on August 30, 2024 and sell it today you would earn a total of 2,363 from holding Columbia India Consumer or generate 52.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Columbia India Consumer
Performance |
| Timeline |
| Coca Cola |
| Columbia India Consumer |
Coca Cola and Columbia India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Columbia India
The main advantage of trading using opposite Coca Cola and Columbia India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Columbia India 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 Columbia India will offset losses from the drop in Columbia India'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 |
| Columbia India vs. iShares MSCI India | Columbia India vs. iShares India 50 | Columbia India vs. Invesco India ETF | Columbia India vs. WisdomTree India Earnings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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