Correlation Between Coca Cola and Vodka Brands
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Vodka Brands 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 Vodka Brands 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 Vodka Brands Corp, you can compare the effects of market volatilities on Coca Cola and Vodka Brands 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 Vodka Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Vodka Brands.
Diversification Opportunities for Coca Cola and Vodka Brands
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Coca and Vodka is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp 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 Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of Coca Cola i.e., Coca Cola and Vodka Brands go up and down completely randomly.
Pair Corralation between Coca Cola and Vodka Brands
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Vodka Brands. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 6.09 times less risky than Vodka Brands. The stock trades about -0.1 of its potential returns per unit of risk. The Vodka Brands Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Vodka Brands Corp on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Vodka Brands Corp or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Coca Cola vs. Vodka Brands Corp
Performance |
| Timeline |
| Coca Cola |
| Vodka Brands Corp |
Coca Cola and Vodka Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Vodka Brands
The main advantage of trading using opposite Coca Cola and Vodka Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Vodka Brands 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 Vodka Brands will offset losses from the drop in Vodka Brands' long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
| Vodka Brands vs. Brown Forman | Vodka Brands vs. Brown Forman | Vodka Brands vs. Eastside Distilling | Vodka Brands vs. Diageo PLC ADR |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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