Correlation Between Coca Cola and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares Consumer 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 Consumer 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 Consumer Discretionary, you can compare the effects of market volatilities on Coca Cola and IShares Consumer 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 Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares Consumer.
Diversification Opportunities for Coca Cola and IShares Consumer
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and IShares is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares Consumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Dis 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 Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Dis has no effect on the direction of Coca Cola i.e., Coca Cola and IShares Consumer go up and down completely randomly.
Pair Corralation between Coca Cola and IShares Consumer
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the IShares Consumer. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.02 times less risky than IShares Consumer. The stock trades about -0.29 of its potential returns per unit of risk. The iShares Consumer Discretionary is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 8,788 in iShares Consumer Discretionary on August 26, 2024 and sell it today you would earn a total of 811.00 from holding iShares Consumer Discretionary or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. iShares Consumer Discretionary
Performance |
| Timeline |
| Coca Cola |
| iShares Consumer Dis |
Coca Cola and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares Consumer
The main advantage of trading using opposite Coca Cola and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares Consumer 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 Consumer will offset losses from the drop in IShares Consumer's long position.The idea behind The Coca Cola and iShares Consumer Discretionary pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares Consumer vs. VanEck Pharmaceutical ETF | IShares Consumer vs. VanEck Biotech ETF | IShares Consumer vs. VanEck Oil Services | IShares Consumer vs. iShares Transportation Average |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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