Correlation Between Coca Cola and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Molina Healthcare 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 Molina Healthcare 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 Molina Healthcare, you can compare the effects of market volatilities on Coca Cola and Molina Healthcare 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 Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Molina Healthcare.
Diversification Opportunities for Coca Cola and Molina Healthcare
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coca and Molina is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare 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 Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of Coca Cola i.e., Coca Cola and Molina Healthcare go up and down completely randomly.
Pair Corralation between Coca Cola and Molina Healthcare
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.35 times more return on investment than Molina Healthcare. However, The Coca Cola is 2.9 times less risky than Molina Healthcare. It trades about 0.05 of its potential returns per unit of risk. Molina Healthcare is currently generating about -0.01 per unit of risk. If you would invest 5,821 in The Coca Cola on November 3, 2024 and sell it today you would earn a total of 527.00 from holding The Coca Cola or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Molina Healthcare
Performance |
| Timeline |
| Coca Cola |
| Molina Healthcare |
Coca Cola and Molina Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Molina Healthcare
The main advantage of trading using opposite Coca Cola and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Molina Healthcare 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 Molina Healthcare will offset losses from the drop in Molina Healthcare'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 |
| Molina Healthcare vs. Cigna Corp | Molina Healthcare vs. Humana Inc | Molina Healthcare vs. Elevance Health | Molina Healthcare vs. Alignment Healthcare LLC |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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