Correlation Between Coca Cola and Ingredion Incorporated
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Ingredion Incorporated 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 Ingredion Incorporated 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 Ingredion Incorporated, you can compare the effects of market volatilities on Coca Cola and Ingredion Incorporated 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 Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Ingredion Incorporated.
Diversification Opportunities for Coca Cola and Ingredion Incorporated
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Ingredion is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated 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 Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of Coca Cola i.e., Coca Cola and Ingredion Incorporated go up and down completely randomly.
Pair Corralation between Coca Cola and Ingredion Incorporated
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Ingredion Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 4.31 times less risky than Ingredion Incorporated. The stock trades about -0.1 of its potential returns per unit of risk. The Ingredion Incorporated is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13,364 in Ingredion Incorporated on August 31, 2024 and sell it today you would earn a total of 1,370 from holding Ingredion Incorporated or generate 10.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Ingredion Incorporated
Performance |
| Timeline |
| Coca Cola |
| Ingredion Incorporated |
Coca Cola and Ingredion Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Ingredion Incorporated
The main advantage of trading using opposite Coca Cola and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Ingredion Incorporated 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 Ingredion Incorporated will offset losses from the drop in Ingredion Incorporated's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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