Correlation Between Coca Cola and Pacer Benchmark
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Pacer Benchmark 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 Pacer Benchmark 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 Pacer Benchmark Industrial, you can compare the effects of market volatilities on Coca Cola and Pacer Benchmark 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 Pacer Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Pacer Benchmark.
Diversification Opportunities for Coca Cola and Pacer Benchmark
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Coca and Pacer is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Pacer Benchmark Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Indu 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 Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Indu has no effect on the direction of Coca Cola i.e., Coca Cola and Pacer Benchmark go up and down completely randomly.
Pair Corralation between Coca Cola and Pacer Benchmark
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.45 times less return on investment than Pacer Benchmark. But when comparing it to its historical volatility, The Coca Cola is 1.47 times less risky than Pacer Benchmark. It trades about 0.02 of its potential returns per unit of risk. Pacer Benchmark Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,596 in Pacer Benchmark Industrial on August 30, 2024 and sell it today you would earn a total of 359.00 from holding Pacer Benchmark Industrial or generate 9.98% 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. Pacer Benchmark Industrial
Performance |
| Timeline |
| Coca Cola |
| Pacer Benchmark Indu |
Coca Cola and Pacer Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Pacer Benchmark
The main advantage of trading using opposite Coca Cola and Pacer Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Pacer Benchmark 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 Pacer Benchmark will offset losses from the drop in Pacer Benchmark'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 |
| Pacer Benchmark vs. Pacer Benchmark Data | Pacer Benchmark vs. US Diversified Real | Pacer Benchmark vs. Nuveen Short Term REIT |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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