Correlation Between Coca Cola and TARGET
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By analyzing existing cross correlation between The Coca Cola and TARGET P 635, you can compare the effects of market volatilities on Coca Cola and TARGET 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 TARGET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and TARGET.
Diversification Opportunities for Coca Cola and TARGET
Poor diversification
The 3 months correlation between Coca and TARGET is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and TARGET P 635 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TARGET P 635 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 TARGET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TARGET P 635 has no effect on the direction of Coca Cola i.e., Coca Cola and TARGET go up and down completely randomly.
Pair Corralation between Coca Cola and TARGET
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.95 times more return on investment than TARGET. However, The Coca Cola is 1.05 times less risky than TARGET. It trades about 0.04 of its potential returns per unit of risk. TARGET P 635 is currently generating about 0.0 per unit of risk. If you would invest 5,722 in The Coca Cola on August 31, 2024 and sell it today you would earn a total of 686.00 from holding The Coca Cola or generate 11.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.54% |
| Values | Daily Returns |
The Coca Cola vs. TARGET P 635
Performance |
| Timeline |
| Coca Cola |
| TARGET P 635 |
Coca Cola and TARGET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and TARGET
The main advantage of trading using opposite Coca Cola and TARGET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, TARGET 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 TARGET will offset losses from the drop in TARGET's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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