Correlation Between Coca Cola and IShares SP
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares SP 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 IShares SP 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 iShares SP 500, you can compare the effects of market volatilities on Coca Cola and IShares SP 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares SP.
Diversification Opportunities for Coca Cola and IShares SP
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and IShares is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Coca Cola i.e., Coca Cola and IShares SP go up and down completely randomly.
Pair Corralation between Coca Cola and IShares SP
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.62 times more return on investment than IShares SP. However, Coca Cola is 1.62 times more volatile than iShares SP 500. It trades about 0.17 of its potential returns per unit of risk. iShares SP 500 is currently generating about -0.23 per unit of risk. If you would invest 6,139 in The Coca Cola on September 18, 2024 and sell it today you would earn a total of 201.00 from holding The Coca Cola or generate 3.27% 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. iShares SP 500
Performance |
| Timeline |
| Coca Cola |
| iShares SP 500 |
Coca Cola and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares SP
The main advantage of trading using opposite Coca Cola and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares SP 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 IShares SP will offset losses from the drop in IShares SP's long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. Coca Cola European Partners | Coca Cola vs. Coca Cola Consolidated |
| IShares SP vs. iShares SP 500 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Mid Cap |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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