Correlation Between Coca Cola and Flow Beverage
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Flow Beverage 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 Flow Beverage 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 Flow Beverage Corp, you can compare the effects of market volatilities on Coca Cola and Flow Beverage 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 Flow Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Flow Beverage.
Diversification Opportunities for Coca Cola and Flow Beverage
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Flow is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Femsa SAB and Flow Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Beverage Corp 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 Flow Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Beverage Corp has no effect on the direction of Coca Cola i.e., Coca Cola and Flow Beverage go up and down completely randomly.
Pair Corralation between Coca Cola and Flow Beverage
Considering the 90-day investment horizon Coca Cola is expected to generate 1.79 times less return on investment than Flow Beverage. But when comparing it to its historical volatility, Coca Cola Femsa SAB is 4.35 times less risky than Flow Beverage. It trades about 0.06 of its potential returns per unit of risk. Flow Beverage Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9.97 in Flow Beverage Corp on September 13, 2024 and sell it today you would earn a total of 0.03 from holding Flow Beverage Corp or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola Femsa SAB vs. Flow Beverage Corp
Performance |
| Timeline |
| Coca Cola Femsa |
| Flow Beverage Corp |
Coca Cola and Flow Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Flow Beverage
The main advantage of trading using opposite Coca Cola and Flow Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Flow Beverage 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 Flow Beverage will offset losses from the drop in Flow Beverage'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 |
| Flow Beverage vs. Barfresh Food Group | Flow Beverage vs. Fbec Worldwide | Flow Beverage vs. Hill Street Beverage | Flow Beverage vs. Eq Energy Drink |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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