Correlation Between Coca Cola and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Timothy Plan 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 Timothy Plan 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 Timothy Plan , you can compare the effects of market volatilities on Coca Cola and Timothy Plan 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 Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Timothy Plan.
Diversification Opportunities for Coca Cola and Timothy Plan
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Timothy is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Timothy Plan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan 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 Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan has no effect on the direction of Coca Cola i.e., Coca Cola and Timothy Plan go up and down completely randomly.
Pair Corralation between Coca Cola and Timothy Plan
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Timothy Plan. In addition to that, Coca Cola is 1.03 times more volatile than Timothy Plan . It trades about -0.21 of its total potential returns per unit of risk. Timothy Plan is currently generating about 0.24 per unit of volatility. If you would invest 2,562 in Timothy Plan on August 27, 2024 and sell it today you would earn a total of 116.00 from holding Timothy Plan or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Timothy Plan
Performance |
| Timeline |
| Coca Cola |
| Timothy Plan |
Coca Cola and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Timothy Plan
The main advantage of trading using opposite Coca Cola and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Timothy Plan 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 Timothy Plan will offset losses from the drop in Timothy Plan's long position.The idea behind The Coca Cola and Timothy Plan 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.| Timothy Plan vs. Timothy Plan | Timothy Plan vs. Timothy Plan High | Timothy Plan vs. Timothy Plan LargeMid | Timothy Plan vs. Timothy Plan Small |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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