Correlation Between Coca Cola and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Pembina Pipeline 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 Pembina Pipeline 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 Pembina Pipeline, you can compare the effects of market volatilities on Coca Cola and Pembina Pipeline 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 Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Pembina Pipeline.
Diversification Opportunities for Coca Cola and Pembina Pipeline
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Pembina is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Pembina Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline has no effect on the direction of Coca Cola i.e., Coca Cola and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Coca Cola and Pembina Pipeline
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Pembina Pipeline. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.49 times less risky than Pembina Pipeline. The stock trades about -0.21 of its potential returns per unit of risk. The Pembina Pipeline is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,717 in Pembina Pipeline on September 2, 2024 and sell it today you would earn a total of 83.00 from holding Pembina Pipeline or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
The Coca Cola vs. Pembina Pipeline
Performance |
| Timeline |
| Coca Cola |
| Pembina Pipeline |
Coca Cola and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Pembina Pipeline
The main advantage of trading using opposite Coca Cola and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline'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 |
| Pembina Pipeline vs. Bill Com Holdings | Pembina Pipeline vs. Bt Brands | Pembina Pipeline vs. The Wendys Co | Pembina Pipeline vs. Kura Sushi USA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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