Correlation Between Coca Cola and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IQ MacKay 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 IQ MacKay 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 IQ MacKay ESG, you can compare the effects of market volatilities on Coca Cola and IQ MacKay 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 IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IQ MacKay.
Diversification Opportunities for Coca Cola and IQ MacKay
Very good diversification
The 3 months correlation between Coca and IQHI is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and IQ MacKay ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay ESG 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 IQ MacKay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ MacKay ESG has no effect on the direction of Coca Cola i.e., Coca Cola and IQ MacKay go up and down completely randomly.
Pair Corralation between Coca Cola and IQ MacKay
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the IQ MacKay. In addition to that, Coca Cola is 4.19 times more volatile than IQ MacKay ESG. It trades about -0.16 of its total potential returns per unit of risk. IQ MacKay ESG is currently generating about 0.24 per unit of volatility. If you would invest 2,660 in IQ MacKay ESG on August 29, 2024 and sell it today you would earn a total of 31.00 from holding IQ MacKay ESG or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. IQ MacKay ESG
Performance |
| Timeline |
| Coca Cola |
| IQ MacKay ESG |
Coca Cola and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IQ MacKay
The main advantage of trading using opposite Coca Cola and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IQ MacKay 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 IQ MacKay will offset losses from the drop in IQ MacKay'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 |
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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