Correlation Between Coca Cola and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Pacer Funds 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 Pacer Funds 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 Pacer Funds Trust, you can compare the effects of market volatilities on Coca Cola and Pacer Funds 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 Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Pacer Funds.
Diversification Opportunities for Coca Cola and Pacer Funds
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Coca and Pacer is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust 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 Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Coca Cola i.e., Coca Cola and Pacer Funds go up and down completely randomly.
Pair Corralation between Coca Cola and Pacer Funds
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.31 times less return on investment than Pacer Funds. But when comparing it to its historical volatility, The Coca Cola is 1.83 times less risky than Pacer Funds. It trades about 0.09 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,173 in Pacer Funds Trust on November 28, 2024 and sell it today you would earn a total of 811.00 from holding Pacer Funds Trust or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Pacer Funds Trust
Performance |
| Timeline |
| Coca Cola |
| Pacer Funds Trust |
Coca Cola and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Pacer Funds
The main advantage of trading using opposite Coca Cola and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Pacer Funds 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 Pacer Funds will offset losses from the drop in Pacer Funds' long position.| Coca Cola vs. Vita Coco | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. PepsiCo | Coca Cola vs. Coca Cola Femsa SAB |
| Pacer Funds vs. Strategy Shares | Pacer Funds vs. Freedom Day Dividend | Pacer Funds vs. Franklin Templeton ETF | Pacer Funds vs. iShares MSCI China |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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