Correlation Between Coca Cola and Rubicon Organics
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Rubicon Organics 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 Rubicon Organics 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 Rubicon Organics, you can compare the effects of market volatilities on Coca Cola and Rubicon Organics 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 Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Rubicon Organics.
Diversification Opportunities for Coca Cola and Rubicon Organics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Rubicon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics 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 Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Coca Cola i.e., Coca Cola and Rubicon Organics go up and down completely randomly.
Pair Corralation between Coca Cola and Rubicon Organics
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.14 times more return on investment than Rubicon Organics. However, The Coca Cola is 7.2 times less risky than Rubicon Organics. It trades about -0.09 of its potential returns per unit of risk. Rubicon Organics is currently generating about -0.05 per unit of risk. If you would invest 6,556 in The Coca Cola on August 30, 2024 and sell it today you would lose (113.00) from holding The Coca Cola or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Rubicon Organics
Performance |
| Timeline |
| Coca Cola |
| Rubicon Organics |
Coca Cola and Rubicon Organics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Rubicon Organics
The main advantage of trading using opposite Coca Cola and Rubicon Organics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Rubicon Organics 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 Rubicon Organics will offset losses from the drop in Rubicon Organics' long position.| Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. PepsiCo | Coca Cola vs. Coca Cola Femsa SAB |
| Rubicon Organics vs. Benchmark Botanics | Rubicon Organics vs. Speakeasy Cannabis Club | Rubicon Organics vs. City View Green | Rubicon Organics vs. BC Craft Supply |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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