Correlation Between Coca Cola and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both Coca Cola and X-FAB Silicon 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 X-FAB Silicon 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Coca Cola and X-FAB Silicon 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 X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and X-FAB Silicon.
Diversification Opportunities for Coca Cola and X-FAB Silicon
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and X-FAB is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Coca Cola i.e., Coca Cola and X-FAB Silicon go up and down completely randomly.
Pair Corralation between Coca Cola and X-FAB Silicon
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.29 times more return on investment than X-FAB Silicon. However, The Coca Cola is 3.4 times less risky than X-FAB Silicon. It trades about -0.12 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.29 per unit of risk. If you would invest 6,667 in The Coca Cola on August 29, 2024 and sell it today you would lose (176.00) from holding The Coca Cola or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Coca Cola |
| X FAB Silicon |
Coca Cola and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and X-FAB Silicon
The main advantage of trading using opposite Coca Cola and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, X-FAB Silicon 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 X-FAB Silicon will offset losses from the drop in X-FAB Silicon's long position.| Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola European Partners | Coca Cola vs. Capital Income Builder | Coca Cola vs. Direxion Daily FTSE |
| X-FAB Silicon vs. NVIDIA | X-FAB Silicon vs. Intel | X-FAB Silicon vs. Taiwan Semiconductor Manufacturing | X-FAB Silicon vs. Marvell Technology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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