Correlation Between Coca Cola and Performance Food
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on Coca Cola and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Performance Food.
Diversification Opportunities for Coca Cola and Performance Food
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Performance is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Coca Cola i.e., Coca Cola and Performance Food go up and down completely randomly.
Pair Corralation between Coca Cola and Performance Food
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 2.67 times less return on investment than Performance Food. But when comparing it to its historical volatility, The Coca Cola is 1.92 times less risky than Performance Food. It trades about 0.06 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,399 in Performance Food Group on August 24, 2024 and sell it today you would earn a total of 2,241 from holding Performance Food Group or generate 35.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Performance Food Group
Performance |
| Timeline |
| Coca Cola |
| Performance Food |
Coca Cola and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Performance Food
The main advantage of trading using opposite Coca Cola and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. Eshallgo Class A | Coca Cola vs. Amtech Systems | Coca Cola vs. Gold Fields Ltd |
| Performance Food vs. Sysco | Performance Food vs. The Chefs Warehouse | Performance Food vs. United Natural Foods | Performance Food vs. Calavo Growers |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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