Correlation Between United Fire and Coca Cola
Can any of the company-specific risk be diversified away by investing in both United Fire 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 United Fire and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and The Coca Cola, you can compare the effects of market volatilities on United Fire 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 United Fire with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Coca Cola.
Diversification Opportunities for United Fire and Coca Cola
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Coca is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and United Fire 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 United Fire Group 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 United Fire i.e., United Fire and Coca Cola go up and down completely randomly.
Pair Corralation between United Fire and Coca Cola
Given the investment horizon of 90 days United Fire Group is expected to generate 3.1 times more return on investment than Coca Cola. However, United Fire is 3.1 times more volatile than The Coca Cola. It trades about 0.04 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.05 per unit of risk. If you would invest 2,051 in United Fire Group on November 3, 2024 and sell it today you would earn a total of 430.00 from holding United Fire Group or generate 20.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. The Coca Cola
Performance |
| Timeline |
| United Fire Group |
| Coca Cola |
United Fire and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Coca Cola
The main advantage of trading using opposite United Fire and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire 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.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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