Correlation Between Coca Cola and PVH Corp
Can any of the company-specific risk be diversified away by investing in both Coca Cola and PVH Corp 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 PVH Corp 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 PVH Corp, you can compare the effects of market volatilities on Coca Cola and PVH Corp 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and PVH Corp.
Diversification Opportunities for Coca Cola and PVH Corp
Excellent diversification
The 3 months correlation between Coca and PVH is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Coca Cola i.e., Coca Cola and PVH Corp go up and down completely randomly.
Pair Corralation between Coca Cola and PVH Corp
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the PVH Corp. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 2.36 times less risky than PVH Corp. The stock trades about -0.06 of its potential returns per unit of risk. The PVH Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 9,843 in PVH Corp on September 1, 2024 and sell it today you would earn a total of 994.00 from holding PVH Corp or generate 10.1% 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. PVH Corp
Performance |
| Timeline |
| Coca Cola |
| PVH Corp |
Coca Cola and PVH Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and PVH Corp
The main advantage of trading using opposite Coca Cola and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp'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 |
| PVH Corp vs. VF Corporation | PVH Corp vs. Levi Strauss Co | PVH Corp vs. Columbia Sportswear | PVH Corp vs. Oxford Industries |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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