Correlation Between Coca Cola and Key Tronic
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Key Tronic 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 Key Tronic 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 Key Tronic, you can compare the effects of market volatilities on Coca Cola and Key Tronic 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 Key Tronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Key Tronic.
Diversification Opportunities for Coca Cola and Key Tronic
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Key is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic 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 Key Tronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Tronic has no effect on the direction of Coca Cola i.e., Coca Cola and Key Tronic go up and down completely randomly.
Pair Corralation between Coca Cola and Key Tronic
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.46 times more return on investment than Key Tronic. However, The Coca Cola is 2.19 times less risky than Key Tronic. It trades about -0.17 of its potential returns per unit of risk. Key Tronic is currently generating about -0.24 per unit of risk. If you would invest 6,667 in The Coca Cola on August 28, 2024 and sell it today you would lose (229.00) from holding The Coca Cola or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Key Tronic
Performance |
| Timeline |
| Coca Cola |
| Key Tronic |
Coca Cola and Key Tronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Key Tronic
The main advantage of trading using opposite Coca Cola and Key Tronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Key Tronic 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 Key Tronic will offset losses from the drop in Key Tronic's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| Key Tronic vs. AGM Group Holdings | Key Tronic vs. TransAct Technologies Incorporated | Key Tronic vs. AstroNova | Key Tronic vs. Quantum |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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