Correlation Between Primo Brands and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Primo Brands 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 Primo Brands and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primo Brands and Coca Cola Consolidated, you can compare the effects of market volatilities on Primo Brands 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 Primo Brands with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primo Brands and Coca Cola.
Diversification Opportunities for Primo Brands and Coca Cola
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Primo and Coca is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands 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 Primo Brands 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 Primo Brands 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 Primo Brands i.e., Primo Brands and Coca Cola go up and down completely randomly.
Pair Corralation between Primo Brands and Coca Cola
Given the investment horizon of 90 days Primo Brands is expected to generate 1.25 times more return on investment than Coca Cola. However, Primo Brands is 1.25 times more volatile than Coca Cola Consolidated. It trades about 0.22 of its potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.0 per unit of risk. If you would invest 2,139 in Primo Brands on August 31, 2024 and sell it today you would earn a total of 723.00 from holding Primo Brands or generate 33.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primo Brands vs. Coca Cola Consolidated
Performance |
| Timeline |
| Primo Brands |
| Coca Cola Consolidated |
Primo Brands and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primo Brands and Coca Cola
The main advantage of trading using opposite Primo Brands and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Brands 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.| Primo Brands vs. Getty Images Holdings | Primo Brands vs. Hurco Companies | Primo Brands vs. Aldel Financial II | Primo Brands vs. Radcom |
| Coca Cola vs. Vita Coco | Coca Cola vs. PepsiCo | Coca Cola vs. The Coca Cola | Coca Cola vs. Coca Cola Femsa SAB |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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