Correlation Between NBI Bearings and Coca Cola
Can any of the company-specific risk be diversified away by investing in both NBI Bearings 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 NBI Bearings and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBI Bearings Europe and Coca Cola European Partners, you can compare the effects of market volatilities on NBI Bearings 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 NBI Bearings with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Bearings and Coca Cola.
Diversification Opportunities for NBI Bearings and Coca Cola
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NBI and Coca is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding NBI Bearings Europe and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European and NBI Bearings 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 NBI Bearings Europe 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 European has no effect on the direction of NBI Bearings i.e., NBI Bearings and Coca Cola go up and down completely randomly.
Pair Corralation between NBI Bearings and Coca Cola
Assuming the 90 days trading horizon NBI Bearings Europe is expected to under-perform the Coca Cola. But the stock apears to be less risky and, when comparing its historical volatility, NBI Bearings Europe is 1.5 times less risky than Coca Cola. The stock trades about -0.3 of its potential returns per unit of risk. The Coca Cola European Partners is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,181 in Coca Cola European Partners on August 28, 2024 and sell it today you would earn a total of 299.00 from holding Coca Cola European Partners or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NBI Bearings Europe vs. Coca Cola European Partners
Performance |
| Timeline |
| NBI Bearings Europe |
| Coca Cola European |
NBI Bearings and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBI Bearings and Coca Cola
The main advantage of trading using opposite NBI Bearings and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Bearings 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.| NBI Bearings vs. Viscofan | NBI Bearings vs. Metrovacesa SA | NBI Bearings vs. Elecnor SA | NBI Bearings vs. Mapfre |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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