Correlation Between Coca Cola and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Coca Cola and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio SP, you can compare the effects of market volatilities on Coca Cola and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and SPDR Portfolio.
Diversification Opportunities for Coca Cola and SPDR Portfolio
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and SPDR is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Coca Cola i.e., Coca Cola and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Coca Cola and SPDR Portfolio
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the SPDR Portfolio. In addition to that, Coca Cola is 1.21 times more volatile than SPDR Portfolio SP. It trades about -0.23 of its total potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.24 per unit of volatility. If you would invest 5,265 in SPDR Portfolio SP on August 26, 2024 and sell it today you would earn a total of 202.00 from holding SPDR Portfolio SP or generate 3.84% 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. SPDR Portfolio SP
Performance |
| Timeline |
| Coca Cola |
| SPDR Portfolio SP |
Coca Cola and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and SPDR Portfolio
The main advantage of trading using opposite Coca Cola and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio's long position.The idea behind The Coca Cola and SPDR Portfolio SP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR SP 600 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |