Correlation Between Coca Cola and Grupo Aeroportuario
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Grupo Aeroportuario 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 Grupo Aeroportuario into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola Femsa SAB and Grupo Aeroportuario del, you can compare the effects of market volatilities on Coca Cola and Grupo Aeroportuario 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 Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Grupo Aeroportuario.
Diversification Opportunities for Coca Cola and Grupo Aeroportuario
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and Grupo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Femsa SAB and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Coca Cola Femsa SAB are associated (or correlated) with Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Coca Cola i.e., Coca Cola and Grupo Aeroportuario go up and down completely randomly.
Pair Corralation between Coca Cola and Grupo Aeroportuario
Considering the 90-day investment horizon Coca Cola Femsa SAB is expected to under-perform the Grupo Aeroportuario. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola Femsa SAB is 1.16 times less risky than Grupo Aeroportuario. The stock trades about -0.07 of its potential returns per unit of risk. The Grupo Aeroportuario del is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 26,461 in Grupo Aeroportuario del on August 31, 2024 and sell it today you would lose (265.00) from holding Grupo Aeroportuario del or give up 1.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola Femsa SAB vs. Grupo Aeroportuario del
Performance |
| Timeline |
| Coca Cola Femsa |
| Grupo Aeroportuario del |
Coca Cola and Grupo Aeroportuario Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Grupo Aeroportuario
The main advantage of trading using opposite Coca Cola and Grupo Aeroportuario positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Grupo Aeroportuario 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 Grupo Aeroportuario will offset losses from the drop in Grupo Aeroportuario's long position.| Coca Cola vs. Fomento Economico Mexicano | Coca Cola vs. Grupo Televisa SAB | Coca Cola vs. Grupo Aeroportuario del | Coca Cola vs. Grupo Aeroportuario del |
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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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