Correlation Between Coca Cola and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Coca Cola and SPDR SP 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 SPDR SP 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 SPDR SP 1500, you can compare the effects of market volatilities on Coca Cola and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and SPDR SP.
Diversification Opportunities for Coca Cola and SPDR SP
Pay attention - limited upside
The 3 months correlation between Coca and SPDR is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and SPDR SP 1500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 1500 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 1500 has no effect on the direction of Coca Cola i.e., Coca Cola and SPDR SP go up and down completely randomly.
Pair Corralation between Coca Cola and SPDR SP
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 5.79 times less return on investment than SPDR SP. But when comparing it to its historical volatility, The Coca Cola is 1.11 times less risky than SPDR SP. It trades about 0.02 of its potential returns per unit of risk. SPDR SP 1500 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 16,556 in SPDR SP 1500 on August 28, 2024 and sell it today you would earn a total of 9,958 from holding SPDR SP 1500 or generate 60.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. SPDR SP 1500
Performance |
| Timeline |
| Coca Cola |
| SPDR SP 1500 |
Coca Cola and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and SPDR SP
The main advantage of trading using opposite Coca Cola and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. Freedom Day Dividend | SPDR SP vs. Davis Select International | SPDR SP vs. iShares MSCI China | SPDR SP vs. SmartETFs Dividend Builder |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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