Correlation Between Coca Cola and Rover
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Rover 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 Rover 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 Rover Group, you can compare the effects of market volatilities on Coca Cola and Rover 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 Rover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Rover.
Diversification Opportunities for Coca Cola and Rover
Excellent diversification
The 3 months correlation between Coca and Rover is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Rover Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rover Group 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 Rover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rover Group has no effect on the direction of Coca Cola i.e., Coca Cola and Rover go up and down completely randomly.
Pair Corralation between Coca Cola and Rover
If you would invest 520.00 in Rover Group on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Rover Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
The Coca Cola vs. Rover Group
Performance |
| Timeline |
| Coca Cola |
| Rover Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Coca Cola and Rover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Rover
The main advantage of trading using opposite Coca Cola and Rover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Rover 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 Rover will offset losses from the drop in Rover's long position.| Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. Eshallgo Class A | Coca Cola vs. Amtech Systems | Coca Cola vs. Gold Fields Ltd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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