Correlation Between Coca Cola and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Coca Cola and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort Consumer, you can compare the effects of market volatilities on Coca Cola and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and ProShares UltraShort.
Diversification Opportunities for Coca Cola and ProShares UltraShort
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and ProShares is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and ProShares UltraShort Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Coca Cola i.e., Coca Cola and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Coca Cola and ProShares UltraShort
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.68 times more return on investment than ProShares UltraShort. However, The Coca Cola is 1.48 times less risky than ProShares UltraShort. It trades about -0.06 of its potential returns per unit of risk. ProShares UltraShort Consumer is currently generating about -0.23 per unit of risk. If you would invest 6,482 in The Coca Cola on September 1, 2024 and sell it today you would lose (74.00) from holding The Coca Cola or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Coca Cola vs. ProShares UltraShort Consumer
Performance |
| Timeline |
| Coca Cola |
| ProShares UltraShort |
Coca Cola and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and ProShares UltraShort
The main advantage of trading using opposite Coca Cola and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort'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 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |