Correlation Between Primo Water and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Primo Water 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 Water 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 Water Corp and Coca Cola Consolidated, you can compare the effects of market volatilities on Primo Water 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 Water with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primo Water and Coca Cola.
Diversification Opportunities for Primo Water and Coca Cola
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Primo and Coca is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Primo Water Corp 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 Water 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 Water Corp 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 Water i.e., Primo Water and Coca Cola go up and down completely randomly.
Pair Corralation between Primo Water and Coca Cola
Given the investment horizon of 90 days Primo Water is expected to generate 1.32 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Primo Water Corp is 1.2 times less risky than Coca Cola. It trades about 0.09 of its potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 52,464 in Coca Cola Consolidated on August 30, 2024 and sell it today you would earn a total of 78,776 from holding Coca Cola Consolidated or generate 150.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
Primo Water Corp vs. Coca Cola Consolidated
Performance |
| Timeline |
| Primo Water Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Coca Cola Consolidated |
Primo Water and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primo Water and Coca Cola
The main advantage of trading using opposite Primo Water and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Water 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 Water vs. Embotelladora Andina SA | Primo Water vs. Signet International Holdings | Primo Water vs. National Beverage Corp | Primo Water vs. PT Astra International |
| Coca Cola vs. The Coca Cola | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Keurig Dr Pepper |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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