Correlation Between QUALCOMM Incorporated and Coca Cola
Can any of the company-specific risk be diversified away by investing in both QUALCOMM Incorporated 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 QUALCOMM Incorporated and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QUALCOMM Incorporated and The Coca Cola, you can compare the effects of market volatilities on QUALCOMM Incorporated 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 QUALCOMM Incorporated with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUALCOMM Incorporated and Coca Cola.
Diversification Opportunities for QUALCOMM Incorporated and Coca Cola
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between QUALCOMM and Coca is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding QUALCOMM Incorporated and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and QUALCOMM Incorporated 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 QUALCOMM Incorporated 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 QUALCOMM Incorporated i.e., QUALCOMM Incorporated and Coca Cola go up and down completely randomly.
Pair Corralation between QUALCOMM Incorporated and Coca Cola
Assuming the 90 days trading horizon QUALCOMM Incorporated is expected to generate 1.56 times less return on investment than Coca Cola. In addition to that, QUALCOMM Incorporated is 1.4 times more volatile than The Coca Cola. It trades about 0.04 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.09 per unit of volatility. If you would invest 849,171 in The Coca Cola on December 7, 2024 and sell it today you would earn a total of 878,329 from holding The Coca Cola or generate 103.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
QUALCOMM Incorporated vs. The Coca Cola
Performance |
| Timeline |
| QUALCOMM Incorporated |
| Coca Cola |
QUALCOMM Incorporated and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QUALCOMM Incorporated and Coca Cola
The main advantage of trading using opposite QUALCOMM Incorporated and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QUALCOMM Incorporated 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.| QUALCOMM Incorporated vs. Harmony Gold Mining | QUALCOMM Incorporated vs. Compania de Transporte | QUALCOMM Incorporated vs. United States Steel |
| Coca Cola vs. Verizon Communications | Coca Cola vs. Compania de Transporte | Coca Cola vs. Agrometal SAI | Coca Cola vs. Harmony Gold Mining |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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