Correlation Between Coca Cola and AMERICAN
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By analyzing existing cross correlation between The Coca Cola and AMERICAN EXPRESS CR, you can compare the effects of market volatilities on Coca Cola and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and AMERICAN.
Diversification Opportunities for Coca Cola and AMERICAN
Poor diversification
The 3 months correlation between Coca and AMERICAN is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and AMERICAN EXPRESS CR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN EXPRESS 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN EXPRESS has no effect on the direction of Coca Cola i.e., Coca Cola and AMERICAN go up and down completely randomly.
Pair Corralation between Coca Cola and AMERICAN
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.75 times more return on investment than AMERICAN. However, Coca Cola is 1.75 times more volatile than AMERICAN EXPRESS CR. It trades about 0.06 of its potential returns per unit of risk. AMERICAN EXPRESS CR is currently generating about 0.03 per unit of risk. If you would invest 5,687 in The Coca Cola on September 3, 2024 and sell it today you would earn a total of 678.00 from holding The Coca Cola or generate 11.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.36% |
| Values | Daily Returns |
The Coca Cola vs. AMERICAN EXPRESS CR
Performance |
| Timeline |
| Coca Cola |
| AMERICAN EXPRESS |
Coca Cola and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and AMERICAN
The main advantage of trading using opposite Coca Cola and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| AMERICAN vs. AEP TEX INC | AMERICAN vs. US BANK NATIONAL | AMERICAN vs. Jackson Financial | AMERICAN vs. MetLife |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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