Correlation Between Coca Cola and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Sealed Air 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 Sealed Air 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 Sealed Air, you can compare the effects of market volatilities on Coca Cola and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Sealed Air.
Diversification Opportunities for Coca Cola and Sealed Air
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Sealed is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Coca Cola i.e., Coca Cola and Sealed Air go up and down completely randomly.
Pair Corralation between Coca Cola and Sealed Air
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Sealed Air. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.79 times less risky than Sealed Air. The stock trades about -0.12 of its potential returns per unit of risk. The Sealed Air is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,666 in Sealed Air on August 29, 2024 and sell it today you would lose (6.00) from holding Sealed Air or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Sealed Air
Performance |
| Timeline |
| Coca Cola |
| Sealed Air |
Coca Cola and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Sealed Air
The main advantage of trading using opposite Coca Cola and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.| Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola European Partners | Coca Cola vs. Capital Income Builder | Coca Cola vs. Direxion Daily FTSE |
| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
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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