Correlation Between Coca Cola and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Payden Emerging 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 Payden Emerging 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 Payden Emerging Markets, you can compare the effects of market volatilities on Coca Cola and Payden Emerging 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 Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Payden Emerging.
Diversification Opportunities for Coca Cola and Payden Emerging
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and Payden is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets 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 Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of Coca Cola i.e., Coca Cola and Payden Emerging go up and down completely randomly.
Pair Corralation between Coca Cola and Payden Emerging
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Payden Emerging. In addition to that, Coca Cola is 1.61 times more volatile than Payden Emerging Markets. It trades about -0.06 of its total potential returns per unit of risk. Payden Emerging Markets is currently generating about -0.09 per unit of volatility. If you would invest 468.00 in Payden Emerging Markets on September 1, 2024 and sell it today you would lose (5.00) from holding Payden Emerging Markets or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Coca Cola vs. Payden Emerging Markets
Performance |
| Timeline |
| Coca Cola |
| Payden Emerging Markets |
Coca Cola and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Payden Emerging
The main advantage of trading using opposite Coca Cola and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Payden Emerging 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 Payden Emerging will offset losses from the drop in Payden Emerging's long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp | Coca Cola vs. Embotelladora Andina SA |
| Payden Emerging vs. Payden Porate Bond | Payden Emerging vs. Payden Absolute Return | Payden Emerging vs. Payden Absolute Return | Payden Emerging vs. Payden Emerging Markets |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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