Correlation Between Coca Cola and SPDR Morgan
Can any of the company-specific risk be diversified away by investing in both Coca Cola and SPDR Morgan 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 SPDR Morgan 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 SPDR Morgan Stanley, you can compare the effects of market volatilities on Coca Cola and SPDR Morgan 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 SPDR Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and SPDR Morgan.
Diversification Opportunities for Coca Cola and SPDR Morgan
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and SPDR is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and SPDR Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Morgan Stanley 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 SPDR Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Morgan Stanley has no effect on the direction of Coca Cola i.e., Coca Cola and SPDR Morgan go up and down completely randomly.
Pair Corralation between Coca Cola and SPDR Morgan
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the SPDR Morgan. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.39 times less risky than SPDR Morgan. The stock trades about -0.09 of its potential returns per unit of risk. The SPDR Morgan Stanley is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 20,249 in SPDR Morgan Stanley on August 30, 2024 and sell it today you would earn a total of 135.00 from holding SPDR Morgan Stanley or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Coca Cola vs. SPDR Morgan Stanley
Performance |
| Timeline |
| Coca Cola |
| SPDR Morgan Stanley |
Coca Cola and SPDR Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and SPDR Morgan
The main advantage of trading using opposite Coca Cola and SPDR Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, SPDR Morgan 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 SPDR Morgan will offset losses from the drop in SPDR Morgan's long position.| Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. PepsiCo | Coca Cola vs. Coca Cola Femsa SAB |
| SPDR Morgan vs. SPDR FactSet Innovative | SPDR Morgan vs. SPDR SP Software | SPDR Morgan vs. SPDR SP Health | SPDR Morgan vs. iShares Expanded Tech |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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