Correlation Between Coca Cola and VanEck Mortgage
Can any of the company-specific risk be diversified away by investing in both Coca Cola and VanEck Mortgage 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 VanEck Mortgage 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 VanEck Mortgage REIT, you can compare the effects of market volatilities on Coca Cola and VanEck Mortgage 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 VanEck Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and VanEck Mortgage.
Diversification Opportunities for Coca Cola and VanEck Mortgage
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and VanEck is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and VanEck Mortgage REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Mortgage REIT 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 VanEck Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Mortgage REIT has no effect on the direction of Coca Cola i.e., Coca Cola and VanEck Mortgage go up and down completely randomly.
Pair Corralation between Coca Cola and VanEck Mortgage
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the VanEck Mortgage. In addition to that, Coca Cola is 1.04 times more volatile than VanEck Mortgage REIT. It trades about -0.17 of its total potential returns per unit of risk. VanEck Mortgage REIT is currently generating about 0.07 per unit of volatility. If you would invest 1,126 in VanEck Mortgage REIT on August 28, 2024 and sell it today you would earn a total of 15.00 from holding VanEck Mortgage REIT or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. VanEck Mortgage REIT
Performance |
| Timeline |
| Coca Cola |
| VanEck Mortgage REIT |
Coca Cola and VanEck Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and VanEck Mortgage
The main advantage of trading using opposite Coca Cola and VanEck Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, VanEck Mortgage 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 VanEck Mortgage will offset losses from the drop in VanEck Mortgage'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 |
| VanEck Mortgage vs. iShares Mortgage Real | VanEck Mortgage vs. Invesco KBW Premium | VanEck Mortgage vs. VanEck BDC Income | VanEck Mortgage vs. Global X SuperDividend |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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