Correlation Between Coca Cola and LOWES
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By analyzing existing cross correlation between The Coca Cola and LOWES INC 6875, you can compare the effects of market volatilities on Coca Cola and LOWES 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 LOWES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and LOWES.
Diversification Opportunities for Coca Cola and LOWES
Poor diversification
The 3 months correlation between Coca and LOWES is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and LOWES INC 6875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 6875 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 LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES INC 6875 has no effect on the direction of Coca Cola i.e., Coca Cola and LOWES go up and down completely randomly.
Pair Corralation between Coca Cola and LOWES
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.47 times more return on investment than LOWES. However, Coca Cola is 1.47 times more volatile than LOWES INC 6875. It trades about -0.03 of its potential returns per unit of risk. LOWES INC 6875 is currently generating about -0.16 per unit of risk. If you would invest 6,452 in The Coca Cola on September 2, 2024 and sell it today you would lose (44.00) from holding The Coca Cola or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
The Coca Cola vs. LOWES INC 6875
Performance |
| Timeline |
| Coca Cola |
| LOWES INC 6875 |
Coca Cola and LOWES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and LOWES
The main advantage of trading using opposite Coca Cola and LOWES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, LOWES 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 LOWES will offset losses from the drop in LOWES'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 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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