Correlation Between Coca Cola and Vanguard Mid
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Vanguard Mid 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 Vanguard Mid 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 Vanguard Mid Cap Index, you can compare the effects of market volatilities on Coca Cola and Vanguard Mid 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 Vanguard Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Vanguard Mid.
Diversification Opportunities for Coca Cola and Vanguard Mid
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Vanguard is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Vanguard Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Coca Cola i.e., Coca Cola and Vanguard Mid go up and down completely randomly.
Pair Corralation between Coca Cola and Vanguard Mid
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 3.18 times less return on investment than Vanguard Mid. In addition to that, Coca Cola is 1.04 times more volatile than Vanguard Mid Cap Index. It trades about 0.03 of its total potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.11 per unit of volatility. If you would invest 20,964 in Vanguard Mid Cap Index on September 12, 2024 and sell it today you would earn a total of 6,937 from holding Vanguard Mid Cap Index or generate 33.09% 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. Vanguard Mid Cap Index
Performance |
| Timeline |
| Coca Cola |
| Vanguard Mid Cap |
Coca Cola and Vanguard Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Vanguard Mid
The main advantage of trading using opposite Coca Cola and Vanguard Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Vanguard Mid 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 Vanguard Mid will offset losses from the drop in Vanguard Mid'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 |
| Vanguard Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard Large Cap Index | Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Small Cap Value |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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