Correlation Between Coca Cola and Exchange Traded
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Exchange Traded 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 Exchange Traded 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 Exchange Traded Concepts, you can compare the effects of market volatilities on Coca Cola and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Exchange Traded.
Diversification Opportunities for Coca Cola and Exchange Traded
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and Exchange is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts 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 Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of Coca Cola i.e., Coca Cola and Exchange Traded go up and down completely randomly.
Pair Corralation between Coca Cola and Exchange Traded
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Exchange Traded. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.25 times less risky than Exchange Traded. The stock trades about -0.21 of its potential returns per unit of risk. The Exchange Traded Concepts is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 3,909 in Exchange Traded Concepts on August 27, 2024 and sell it today you would lose (79.00) from holding Exchange Traded Concepts or give up 2.02% 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. Exchange Traded Concepts
Performance |
| Timeline |
| Coca Cola |
| Exchange Traded Concepts |
Coca Cola and Exchange Traded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Exchange Traded
The main advantage of trading using opposite Coca Cola and Exchange Traded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Exchange Traded 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 Exchange Traded will offset losses from the drop in Exchange Traded'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 |
| Exchange Traded vs. VanEck India Growth | Exchange Traded vs. Franklin FTSE India | Exchange Traded vs. Columbia India Consumer | Exchange Traded vs. First Trust India |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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