Correlation Between Coca Cola and Sabre Gold
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Sabre Gold 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 Sabre Gold 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 Sabre Gold Mines, you can compare the effects of market volatilities on Coca Cola and Sabre Gold 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 Sabre Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Sabre Gold.
Diversification Opportunities for Coca Cola and Sabre Gold
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Sabre is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Sabre Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Gold Mines 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 Sabre Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Gold Mines has no effect on the direction of Coca Cola i.e., Coca Cola and Sabre Gold go up and down completely randomly.
Pair Corralation between Coca Cola and Sabre Gold
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 17.27 times less return on investment than Sabre Gold. But when comparing it to its historical volatility, The Coca Cola is 8.85 times less risky than Sabre Gold. It trades about 0.02 of its potential returns per unit of risk. Sabre Gold Mines is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Sabre Gold Mines on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Sabre Gold Mines or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Sabre Gold Mines
Performance |
| Timeline |
| Coca Cola |
| Sabre Gold Mines |
Coca Cola and Sabre Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Sabre Gold
The main advantage of trading using opposite Coca Cola and Sabre Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Sabre Gold 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 Sabre Gold will offset losses from the drop in Sabre Gold's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| Sabre Gold vs. Telefonica Brasil SA | Sabre Gold vs. Vodafone Group PLC | Sabre Gold vs. Grupo Televisa SAB | Sabre Gold vs. America Movil SAB |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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