Correlation Between Coca Cola and Torex Gold
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Torex Gold 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 Torex Gold 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 Torex Gold Resources, you can compare the effects of market volatilities on Coca Cola and Torex Gold 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 Torex Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Torex Gold.
Diversification Opportunities for Coca Cola and Torex Gold
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Torex is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold Resources 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 Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of Coca Cola i.e., Coca Cola and Torex Gold go up and down completely randomly.
Pair Corralation between Coca Cola and Torex Gold
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Torex Gold. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 3.25 times less risky than Torex Gold. The stock trades about -0.23 of its potential returns per unit of risk. The Torex Gold Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,152 in Torex Gold Resources on August 26, 2024 and sell it today you would earn a total of 73.00 from holding Torex Gold Resources or generate 3.39% 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. Torex Gold Resources
Performance |
| Timeline |
| Coca Cola |
| Torex Gold Resources |
Coca Cola and Torex Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Torex Gold
The main advantage of trading using opposite Coca Cola and Torex Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Torex Gold 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 Torex Gold will offset losses from the drop in Torex Gold's long position.The idea behind The Coca Cola and Torex Gold Resources 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.| Torex Gold vs. Evertz Technologies Limited | Torex Gold vs. Uber Technologies | Torex Gold vs. Acm Research | Torex Gold vs. Marti Technologies |
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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