Correlation Between Coca Cola and IShares Broad
Can any of the company-specific risk be diversified away by investing in both Coca Cola and IShares Broad 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 IShares Broad 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 iShares Broad USD, you can compare the effects of market volatilities on Coca Cola and IShares Broad 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 IShares Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and IShares Broad.
Diversification Opportunities for Coca Cola and IShares Broad
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and IShares is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and iShares Broad USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Broad USD 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 IShares Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Broad USD has no effect on the direction of Coca Cola i.e., Coca Cola and IShares Broad go up and down completely randomly.
Pair Corralation between Coca Cola and IShares Broad
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the IShares Broad. In addition to that, Coca Cola is 4.17 times more volatile than iShares Broad USD. It trades about -0.29 of its total potential returns per unit of risk. iShares Broad USD is currently generating about 0.06 per unit of volatility. If you would invest 3,723 in iShares Broad USD on August 30, 2024 and sell it today you would earn a total of 19.00 from holding iShares Broad USD or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. iShares Broad USD
Performance |
| Timeline |
| Coca Cola |
| iShares Broad USD |
Coca Cola and IShares Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and IShares Broad
The main advantage of trading using opposite Coca Cola and IShares Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, IShares Broad 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 IShares Broad will offset losses from the drop in IShares Broad's long position.| Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. PepsiCo | Coca Cola vs. Coca Cola Femsa SAB |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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