Correlation Between Coca Cola and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Naked Wines 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 Naked Wines 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 Naked Wines plc, you can compare the effects of market volatilities on Coca Cola and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Naked Wines.
Diversification Opportunities for Coca Cola and Naked Wines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Naked is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Coca Cola i.e., Coca Cola and Naked Wines go up and down completely randomly.
Pair Corralation between Coca Cola and Naked Wines
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 3.66 times less return on investment than Naked Wines. But when comparing it to its historical volatility, The Coca Cola is 8.54 times less risky than Naked Wines. It trades about 0.02 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Naked Wines plc on August 27, 2024 and sell it today you would lose (249.00) from holding Naked Wines plc or give up 47.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Naked Wines plc
Performance |
| Timeline |
| Coca Cola |
| Naked Wines plc |
Coca Cola and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Naked Wines
The main advantage of trading using opposite Coca Cola and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' 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 |
| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Constellation Brands Class | Naked Wines vs. Morningstar Unconstrained Allocation | Naked Wines vs. SEI Investments |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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