Correlation Between Coca Cola and ProShares
Can any of the company-specific risk be diversified away by investing in both Coca Cola and ProShares 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 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 SP Technology, you can compare the effects of market volatilities on Coca Cola and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and ProShares.
Diversification Opportunities for Coca Cola and ProShares
Very good diversification
The 3 months correlation between Coca and ProShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and ProShares SP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP Technology 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP Technology has no effect on the direction of Coca Cola i.e., Coca Cola and ProShares go up and down completely randomly.
Pair Corralation between Coca Cola and ProShares
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 3.83 times less return on investment than ProShares. But when comparing it to its historical volatility, The Coca Cola is 1.3 times less risky than ProShares. It trades about 0.02 of its potential returns per unit of risk. ProShares SP Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,617 in ProShares SP Technology on August 30, 2024 and sell it today you would earn a total of 2,105 from holding ProShares SP Technology or generate 37.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. ProShares SP Technology
Performance |
| Timeline |
| Coca Cola |
| ProShares SP Technology |
Coca Cola and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and ProShares
The main advantage of trading using opposite Coca Cola and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.| Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola European Partners | Coca Cola vs. Capital Income Builder | Coca Cola vs. Direxion Daily FTSE |
| ProShares vs. Nexalin Technology | ProShares vs. Kilroy Realty Corp | ProShares vs. Highwoods Properties | ProShares vs. Karat Packaging |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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