Correlation Between Coca Cola and Steward Small
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Steward Small 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 Small 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 Small Mid Cap, you can compare the effects of market volatilities on Coca Cola and Steward Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Steward Small.
Diversification Opportunities for Coca Cola and Steward Small
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Steward is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Steward Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Small Mid 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Small Mid has no effect on the direction of Coca Cola i.e., Coca Cola and Steward Small go up and down completely randomly.
Pair Corralation between Coca Cola and Steward Small
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.76 times less return on investment than Steward Small. But when comparing it to its historical volatility, The Coca Cola is 1.43 times less risky than Steward Small. It trades about 0.08 of its potential returns per unit of risk. Steward Small Mid Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 978.00 in Steward Small Mid Cap on September 1, 2024 and sell it today you would earn a total of 307.00 from holding Steward Small Mid Cap or generate 31.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
The Coca Cola vs. Steward Small Mid Cap
Performance |
| Timeline |
| Coca Cola |
| Steward Small Mid |
Coca Cola and Steward Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Steward Small
The main advantage of trading using opposite Coca Cola and Steward Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Steward Small 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 Small will offset losses from the drop in Steward Small's long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp | Coca Cola vs. Embotelladora Andina SA |
| Steward Small vs. Steward Small Mid Cap | Steward Small vs. Steward Ered Call | Steward Small vs. Steward Ered Call | Steward Small vs. Steward Ered Call |
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 Stocks Directory module to find actively traded stocks across global markets.
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