Correlation Between Coca Cola and Tootsie Roll
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Tootsie Roll 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 Tootsie Roll 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 Tootsie Roll Industries, you can compare the effects of market volatilities on Coca Cola and Tootsie Roll 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 Tootsie Roll. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Tootsie Roll.
Diversification Opportunities for Coca Cola and Tootsie Roll
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Tootsie is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Tootsie Roll Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tootsie Roll Industries 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 Tootsie Roll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tootsie Roll Industries has no effect on the direction of Coca Cola i.e., Coca Cola and Tootsie Roll go up and down completely randomly.
Pair Corralation between Coca Cola and Tootsie Roll
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.73 times more return on investment than Tootsie Roll. However, The Coca Cola is 1.37 times less risky than Tootsie Roll. It trades about 0.11 of its potential returns per unit of risk. Tootsie Roll Industries is currently generating about -0.13 per unit of risk. If you would invest 6,184 in The Coca Cola on November 3, 2024 and sell it today you would earn a total of 164.00 from holding The Coca Cola or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Tootsie Roll Industries
Performance |
| Timeline |
| Coca Cola |
| Tootsie Roll Industries |
Coca Cola and Tootsie Roll Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Tootsie Roll
The main advantage of trading using opposite Coca Cola and Tootsie Roll positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Tootsie Roll 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 Tootsie Roll will offset losses from the drop in Tootsie Roll's long position.| Coca Cola vs. ProShares Russell Dividend | Coca Cola vs. United Rentals | Coca Cola vs. Kforce Inc | Coca Cola vs. The Ensign Group |
| Tootsie Roll vs. Mondelez International | Tootsie Roll vs. Hershey Co | Tootsie Roll vs. Rocky Mountain Chocolate | Tootsie Roll vs. Chocoladefabriken Lindt Sprngli |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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