Correlation Between Coca Cola and Midwest Holding
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Midwest Holding 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 Midwest Holding 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 Midwest Holding, you can compare the effects of market volatilities on Coca Cola and Midwest Holding 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 Midwest Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Midwest Holding.
Diversification Opportunities for Coca Cola and Midwest Holding
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Midwest is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Midwest Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midwest Holding 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 Midwest Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midwest Holding has no effect on the direction of Coca Cola i.e., Coca Cola and Midwest Holding go up and down completely randomly.
Pair Corralation between Coca Cola and Midwest Holding
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 2.49 times less return on investment than Midwest Holding. In addition to that, Coca Cola is 1.11 times more volatile than Midwest Holding. It trades about 0.04 of its total potential returns per unit of risk. Midwest Holding is currently generating about 0.11 per unit of volatility. If you would invest 2,583 in Midwest Holding on August 31, 2024 and sell it today you would earn a total of 68.00 from holding Midwest Holding or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
The Coca Cola vs. Midwest Holding
Performance |
| Timeline |
| Coca Cola |
| Midwest Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Coca Cola and Midwest Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Midwest Holding
The main advantage of trading using opposite Coca Cola and Midwest Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Midwest Holding 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 Midwest Holding will offset losses from the drop in Midwest Holding's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
| Midwest Holding vs. Brighthouse Financial | Midwest Holding vs. Brighthouse Financial | Midwest Holding vs. FG Annuities Life | Midwest Holding vs. CNO Financial Group |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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