Correlation Between Coca Cola and Steward Covered
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Steward Covered 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 Steward Covered 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 Steward Ered Call, you can compare the effects of market volatilities on Coca Cola and Steward Covered 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 Steward Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Steward Covered.
Diversification Opportunities for Coca Cola and Steward Covered
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Coca and Steward is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Steward Ered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Ered Call 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 Steward Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Ered Call has no effect on the direction of Coca Cola i.e., Coca Cola and Steward Covered go up and down completely randomly.
Pair Corralation between Coca Cola and Steward Covered
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 3.22 times more return on investment than Steward Covered. However, Coca Cola is 3.22 times more volatile than Steward Ered Call. It trades about 0.34 of its potential returns per unit of risk. Steward Ered Call is currently generating about -0.08 per unit of risk. If you would invest 6,387 in The Coca Cola on November 27, 2024 and sell it today you would earn a total of 672.00 from holding The Coca Cola or generate 10.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Steward Ered Call
Performance |
| Timeline |
| Coca Cola |
| Steward Ered Call |
Coca Cola and Steward Covered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Steward Covered
The main advantage of trading using opposite Coca Cola and Steward Covered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Steward Covered 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 Steward Covered will offset losses from the drop in Steward Covered's long position.| Coca Cola vs. Vita Coco | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. PepsiCo | Coca Cola vs. Coca Cola Femsa SAB |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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