Correlation Between Coca Cola and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Coca Cola and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Ross Stores.
Diversification Opportunities for Coca Cola and Ross Stores
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Ross is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Coca Cola i.e., Coca Cola and Ross Stores go up and down completely randomly.
Pair Corralation between Coca Cola and Ross Stores
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.1 times more return on investment than Ross Stores. However, Coca Cola is 1.1 times more volatile than Ross Stores. It trades about 0.27 of its potential returns per unit of risk. Ross Stores is currently generating about -0.15 per unit of risk. If you would invest 6,203 in The Coca Cola on November 30, 2024 and sell it today you would earn a total of 918.00 from holding The Coca Cola or generate 14.8% 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. Ross Stores
Performance |
| Timeline |
| Coca Cola |
| Ross Stores |
Coca Cola and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Ross Stores
The main advantage of trading using opposite Coca Cola and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Coca Cola vs. Vita Coco | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. PepsiCo | Coca Cola vs. Coca Cola Femsa SAB |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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