Correlation Between Coca Cola and Universal Security
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Universal Security 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 Universal Security 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 Universal Security Instruments, you can compare the effects of market volatilities on Coca Cola and Universal Security 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 Universal Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Universal Security.
Diversification Opportunities for Coca Cola and Universal Security
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Universal is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Universal Security Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Security 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 Universal Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Security has no effect on the direction of Coca Cola i.e., Coca Cola and Universal Security go up and down completely randomly.
Pair Corralation between Coca Cola and Universal Security
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Universal Security. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 12.11 times less risky than Universal Security. The stock trades about -0.17 of its potential returns per unit of risk. The Universal Security Instruments is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 141.00 in Universal Security Instruments on August 28, 2024 and sell it today you would earn a total of 73.00 from holding Universal Security Instruments or generate 51.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Universal Security Instruments
Performance |
| Timeline |
| Coca Cola |
| Universal Security |
Coca Cola and Universal Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Universal Security
The main advantage of trading using opposite Coca Cola and Universal Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Universal Security 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 Universal Security will offset losses from the drop in Universal Security'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 |
| Universal Security vs. Brinks Company | Universal Security vs. MSA Safety | Universal Security vs. Resideo Technologies | Universal Security vs. Mistras 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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