Correlation Between Coca Cola and Cref Inflation-linked
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Cref Inflation-linked 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 Cref Inflation-linked 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 Cref Inflation Linked Bond, you can compare the effects of market volatilities on Coca Cola and Cref Inflation-linked 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 Cref Inflation-linked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Cref Inflation-linked.
Diversification Opportunities for Coca Cola and Cref Inflation-linked
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and CREF is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked 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 Cref Inflation-linked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Coca Cola i.e., Coca Cola and Cref Inflation-linked go up and down completely randomly.
Pair Corralation between Coca Cola and Cref Inflation-linked
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 3.65 times more return on investment than Cref Inflation-linked. However, Coca Cola is 3.65 times more volatile than Cref Inflation Linked Bond. It trades about 0.06 of its potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about 0.11 per unit of risk. If you would invest 5,729 in The Coca Cola on September 4, 2024 and sell it today you would earn a total of 623.00 from holding The Coca Cola or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Coca Cola vs. Cref Inflation Linked Bond
Performance |
| Timeline |
| Coca Cola |
| Cref Inflation Linked |
Coca Cola and Cref Inflation-linked Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Cref Inflation-linked
The main advantage of trading using opposite Coca Cola and Cref Inflation-linked positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Cref Inflation-linked 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 Cref Inflation-linked will offset losses from the drop in Cref Inflation-linked'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 |
| Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard 500 Index | Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard Total Stock |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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