Correlation Between Promotora and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Promotora 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 Promotora and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and The Coca Cola, you can compare the effects of market volatilities on Promotora 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 Promotora with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Coca Cola.
Diversification Opportunities for Promotora and Coca Cola
Very good diversification
The 3 months correlation between Promotora and Coca is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and Coca Cola go up and down completely randomly.
Pair Corralation between Promotora and Coca Cola
Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 1.24 times more return on investment than Coca Cola. However, Promotora is 1.24 times more volatile than The Coca Cola. It trades about 0.34 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.01 per unit of risk. If you would invest 17,400 in Promotora y Operadora on September 2, 2024 and sell it today you would earn a total of 2,106 from holding Promotora y Operadora or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promotora y Operadora vs. The Coca Cola
Performance |
| Timeline |
| Promotora y Operadora |
| Coca Cola |
Promotora and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and Coca Cola
The main advantage of trading using opposite Promotora and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
| Coca Cola vs. PepsiCo | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. The Select Sector | Coca Cola vs. Promotora y Operadora |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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