Correlation Between Coca Cola and Lifestore Financial
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Lifestore Financial 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 Lifestore Financial 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 Lifestore Financial Group, you can compare the effects of market volatilities on Coca Cola and Lifestore Financial 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 Lifestore Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Lifestore Financial.
Diversification Opportunities for Coca Cola and Lifestore Financial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Lifestore is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Lifestore Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestore Financial 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 Lifestore Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestore Financial has no effect on the direction of Coca Cola i.e., Coca Cola and Lifestore Financial go up and down completely randomly.
Pair Corralation between Coca Cola and Lifestore Financial
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.2 times less return on investment than Lifestore Financial. But when comparing it to its historical volatility, The Coca Cola is 3.58 times less risky than Lifestore Financial. It trades about 0.02 of its potential returns per unit of risk. Lifestore Financial Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,250 in Lifestore Financial Group on September 5, 2024 and sell it today you would lose (350.00) from holding Lifestore Financial Group or give up 8.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.87% |
| Values | Daily Returns |
The Coca Cola vs. Lifestore Financial Group
Performance |
| Timeline |
| Coca Cola |
| Lifestore Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Coca Cola and Lifestore Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Lifestore Financial
The main advantage of trading using opposite Coca Cola and Lifestore Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Lifestore Financial 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 Lifestore Financial will offset losses from the drop in Lifestore Financial'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 |
| Lifestore Financial vs. NETGEAR | Lifestore Financial vs. Marfrig Global Foods | Lifestore Financial vs. Bridgford Foods | Lifestore Financial vs. Uber Technologies |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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