Correlation Between Coca Cola and National Capital
Can any of the company-specific risk be diversified away by investing in both Coca Cola and National Capital 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 National Capital 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 National Capital Bank, you can compare the effects of market volatilities on Coca Cola and National Capital 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 National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and National Capital.
Diversification Opportunities for Coca Cola and National Capital
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and National is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank 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 National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of Coca Cola i.e., Coca Cola and National Capital go up and down completely randomly.
Pair Corralation between Coca Cola and National Capital
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the National Capital. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 5.35 times less risky than National Capital. The stock trades about -0.17 of its potential returns per unit of risk. The National Capital Bank is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 18,943 in National Capital Bank on August 28, 2024 and sell it today you would earn a total of 11,057 from holding National Capital Bank or generate 58.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
The Coca Cola vs. National Capital Bank
Performance |
| Timeline |
| Coca Cola |
| National Capital Bank |
Coca Cola and National Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and National Capital
The main advantage of trading using opposite Coca Cola and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, National Capital 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 National Capital will offset losses from the drop in National Capital'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 |
| National Capital vs. Delhi Bank Corp | National Capital vs. CCSB Financial Corp | National Capital vs. Bank of Utica | National Capital vs. BEO Bancorp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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