Correlation Between Coca Cola and Aquila Narragansett
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Aquila Narragansett 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 Aquila Narragansett 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 Aquila Narragansett Tax Free, you can compare the effects of market volatilities on Coca Cola and Aquila Narragansett 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 Aquila Narragansett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Aquila Narragansett.
Diversification Opportunities for Coca Cola and Aquila Narragansett
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Aquila is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Aquila Narragansett Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquila Narragansett Tax 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 Aquila Narragansett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquila Narragansett Tax has no effect on the direction of Coca Cola i.e., Coca Cola and Aquila Narragansett go up and down completely randomly.
Pair Corralation between Coca Cola and Aquila Narragansett
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 4.05 times more return on investment than Aquila Narragansett. However, Coca Cola is 4.05 times more volatile than Aquila Narragansett Tax Free. It trades about 0.03 of its potential returns per unit of risk. Aquila Narragansett Tax Free is currently generating about 0.08 per unit of risk. If you would invest 5,772 in The Coca Cola on September 12, 2024 and sell it today you would earn a total of 489.50 from holding The Coca Cola or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 69.79% |
| Values | Daily Returns |
The Coca Cola vs. Aquila Narragansett Tax Free
Performance |
| Timeline |
| Coca Cola |
| Aquila Narragansett Tax |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Coca Cola and Aquila Narragansett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Aquila Narragansett
The main advantage of trading using opposite Coca Cola and Aquila Narragansett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Aquila Narragansett 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 Aquila Narragansett will offset losses from the drop in Aquila Narragansett'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 |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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