Correlation Between Coca Cola and Nova Vision
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Nova Vision 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 Nova Vision 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 Nova Vision Acquisition, you can compare the effects of market volatilities on Coca Cola and Nova Vision 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 Nova Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Nova Vision.
Diversification Opportunities for Coca Cola and Nova Vision
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Nova is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Nova Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Vision Acquisition 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 Nova Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Vision Acquisition has no effect on the direction of Coca Cola i.e., Coca Cola and Nova Vision go up and down completely randomly.
Pair Corralation between Coca Cola and Nova Vision
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 607.54 times less return on investment than Nova Vision. But when comparing it to its historical volatility, The Coca Cola is 154.47 times less risky than Nova Vision. It trades about 0.03 of its potential returns per unit of risk. Nova Vision Acquisition is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Nova Vision Acquisition on September 3, 2024 and sell it today you would earn a total of 11.00 from holding Nova Vision Acquisition or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 40.42% |
| Values | Daily Returns |
The Coca Cola vs. Nova Vision Acquisition
Performance |
| Timeline |
| Coca Cola |
| Nova Vision Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Coca Cola and Nova Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Nova Vision
The main advantage of trading using opposite Coca Cola and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Nova Vision 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 Nova Vision will offset losses from the drop in Nova Vision'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 |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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