Correlation Between Procter Gamble and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble DRC and The Coca Cola, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Coca Cola.
Diversification Opportunities for Procter Gamble and Coca Cola
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and Coca is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble DRC and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Procter Gamble 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 Procter Gamble DRC 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 Procter Gamble i.e., Procter Gamble and Coca Cola go up and down completely randomly.
Pair Corralation between Procter Gamble and Coca Cola
Assuming the 90 days horizon Procter Gamble is expected to generate 3.99 times less return on investment than Coca Cola. In addition to that, Procter Gamble is 1.07 times more volatile than The Coca Cola. It trades about 0.03 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.13 per unit of volatility. If you would invest 1,455,000 in The Coca Cola on November 2, 2024 and sell it today you would earn a total of 55,000 from holding The Coca Cola or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Procter Gamble DRC vs. The Coca Cola
Performance |
| Timeline |
| Procter Gamble DRC |
| Coca Cola |
Procter Gamble and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Coca Cola
The main advantage of trading using opposite Procter Gamble and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. United States Steel | Procter Gamble vs. Harmony Gold Mining | Procter Gamble vs. Transportadora de Gas |
| Coca Cola vs. Grimoldi SA | Coca Cola vs. Transportadora de Gas | Coca Cola vs. Alphabet Inc Class A CEDEAR | Coca Cola vs. International Business Machines |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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