Correlation Between Coca Cola and 6 Meridian
Can any of the company-specific risk be diversified away by investing in both Coca Cola and 6 Meridian 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 6 Meridian 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 6 Meridian Quality, you can compare the effects of market volatilities on Coca Cola and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and 6 Meridian.
Diversification Opportunities for Coca Cola and 6 Meridian
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and SXQG is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and 6 Meridian Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Quality 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 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Quality has no effect on the direction of Coca Cola i.e., Coca Cola and 6 Meridian go up and down completely randomly.
Pair Corralation between Coca Cola and 6 Meridian
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 3.69 times less return on investment than 6 Meridian. But when comparing it to its historical volatility, The Coca Cola is 1.12 times less risky than 6 Meridian. It trades about 0.04 of its potential returns per unit of risk. 6 Meridian Quality is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,795 in 6 Meridian Quality on September 1, 2024 and sell it today you would earn a total of 488.00 from holding 6 Meridian Quality or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
The Coca Cola vs. 6 Meridian Quality
Performance |
| Timeline |
| Coca Cola |
| 6 Meridian Quality |
Coca Cola and 6 Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and 6 Meridian
The main advantage of trading using opposite Coca Cola and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. National Beverage Corp | Coca Cola vs. Embotelladora Andina SA |
| 6 Meridian vs. Vanguard Growth Index | 6 Meridian vs. iShares Russell 1000 | 6 Meridian vs. iShares SP 500 | 6 Meridian vs. iShares Core SP |
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 CEOs Directory module to screen CEOs from public companies around the world.
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