Correlation Between Coca Cola and Virtus WMC
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Virtus WMC 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 Virtus WMC 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 Virtus WMC International, you can compare the effects of market volatilities on Coca Cola and Virtus WMC 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 Virtus WMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Virtus WMC.
Diversification Opportunities for Coca Cola and Virtus WMC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and Virtus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Virtus WMC International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus WMC International 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 Virtus WMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus WMC International has no effect on the direction of Coca Cola i.e., Coca Cola and Virtus WMC go up and down completely randomly.
Pair Corralation between Coca Cola and Virtus WMC
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.21 times less return on investment than Virtus WMC. In addition to that, Coca Cola is 1.14 times more volatile than Virtus WMC International. It trades about 0.04 of its total potential returns per unit of risk. Virtus WMC International is currently generating about 0.06 per unit of volatility. If you would invest 2,383 in Virtus WMC International on August 31, 2024 and sell it today you would earn a total of 365.00 from holding Virtus WMC International or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Virtus WMC International
Performance |
| Timeline |
| Coca Cola |
| Virtus WMC International |
Coca Cola and Virtus WMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Virtus WMC
The main advantage of trading using opposite Coca Cola and Virtus WMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Virtus WMC 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 Virtus WMC will offset losses from the drop in Virtus WMC'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 |
| Virtus WMC vs. Franklin Templeton ETF | Virtus WMC vs. Altrius Global Dividend | Virtus WMC vs. Invesco Exchange Traded | Virtus WMC vs. Franklin International Core |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |