Correlation Between Mastercard and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Mastercard and Coca Cola 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 Mastercard and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Coca Cola Consolidated, you can compare the effects of market volatilities on Mastercard and Coca Cola 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 Mastercard with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Coca Cola.
Diversification Opportunities for Mastercard and Coca Cola
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mastercard and Coca is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated and Mastercard 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 Mastercard are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Consolidated has no effect on the direction of Mastercard i.e., Mastercard and Coca Cola go up and down completely randomly.
Pair Corralation between Mastercard and Coca Cola
Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.58 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Mastercard is 1.6 times less risky than Coca Cola. It trades about 0.14 of its potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 123,058 in Coca Cola Consolidated on August 28, 2024 and sell it today you would earn a total of 6,902 from holding Coca Cola Consolidated or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Coca Cola Consolidated
Performance |
| Timeline |
| Mastercard |
| Coca Cola Consolidated |
Mastercard and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Coca Cola
The main advantage of trading using opposite Mastercard and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Mastercard vs. American Express | Mastercard vs. Morningstar Unconstrained Allocation | Mastercard vs. Sitka Gold Corp | Mastercard vs. MSCI ACWI exAUCONSUMER |
| Coca Cola vs. The Coca Cola | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Keurig Dr Pepper |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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