Correlation Between Coca Cola and Pinterest
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Pinterest 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 Pinterest 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 Pinterest, you can compare the effects of market volatilities on Coca Cola and Pinterest 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 Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Pinterest.
Diversification Opportunities for Coca Cola and Pinterest
Average diversification
The 3 months correlation between Coca and Pinterest is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Coca Cola i.e., Coca Cola and Pinterest go up and down completely randomly.
Pair Corralation between Coca Cola and Pinterest
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.22 times more return on investment than Pinterest. However, The Coca Cola is 4.45 times less risky than Pinterest. It trades about -0.06 of its potential returns per unit of risk. Pinterest is currently generating about -0.04 per unit of risk. If you would invest 6,482 in The Coca Cola on September 1, 2024 and sell it today you would lose (74.00) from holding The Coca Cola or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Pinterest
Performance |
| Timeline |
| Coca Cola |
Coca Cola and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Pinterest
The main advantage of trading using opposite Coca Cola and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest's long position.| Coca Cola vs. Vita Coco | Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp |
| Pinterest vs. MediaAlpha | Pinterest vs. Asset Entities Class | Pinterest vs. Shutterstock | Pinterest vs. Match Group |
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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