Correlation Between Miton UK and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Miton UK 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 Miton UK and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miton UK MicroCap and Coca Cola Co, you can compare the effects of market volatilities on Miton UK 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 Miton UK with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miton UK and Coca Cola.
Diversification Opportunities for Miton UK and Coca Cola
Poor diversification
The 3 months correlation between Miton and Coca is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Miton UK MicroCap and Coca Cola Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Miton UK 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 Miton UK MicroCap 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 has no effect on the direction of Miton UK i.e., Miton UK and Coca Cola go up and down completely randomly.
Pair Corralation between Miton UK and Coca Cola
Assuming the 90 days trading horizon Miton UK MicroCap is expected to under-perform the Coca Cola. In addition to that, Miton UK is 1.2 times more volatile than Coca Cola Co. It trades about -0.06 of its total potential returns per unit of risk. Coca Cola Co is currently generating about 0.02 per unit of volatility. If you would invest 6,036 in Coca Cola Co on August 26, 2024 and sell it today you would earn a total of 304.00 from holding Coca Cola Co or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miton UK MicroCap vs. Coca Cola Co
Performance |
| Timeline |
| Miton UK MicroCap |
| Coca Cola |
Miton UK and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miton UK and Coca Cola
The main advantage of trading using opposite Miton UK and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miton UK 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.| Miton UK vs. Catalyst Media Group | Miton UK vs. Oncimmune Holdings plc | Miton UK vs. Invesco Health Care | Miton UK vs. Coor Service Management |
| Coca Cola vs. GreenX Metals | Coca Cola vs. Ameriprise Financial | Coca Cola vs. Ally Financial | Coca Cola vs. Central Asia Metals |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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