Correlation Between AMAZONCOM and Coca Cola
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By analyzing existing cross correlation between AMAZONCOM INC and The Coca Cola, you can compare the effects of market volatilities on AMAZONCOM 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 AMAZONCOM with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMAZONCOM and Coca Cola.
Diversification Opportunities for AMAZONCOM and Coca Cola
Poor diversification
The 3 months correlation between AMAZONCOM and Coca is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding AMAZONCOM INC and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and AMAZONCOM 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 AMAZONCOM INC 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 AMAZONCOM i.e., AMAZONCOM and Coca Cola go up and down completely randomly.
Pair Corralation between AMAZONCOM and Coca Cola
Assuming the 90 days trading horizon AMAZONCOM INC is expected to under-perform the Coca Cola. In addition to that, AMAZONCOM is 1.12 times more volatile than The Coca Cola. It trades about -0.24 of its total potential returns per unit of risk. The Coca Cola is currently generating about -0.12 per unit of volatility. If you would invest 6,592 in The Coca Cola on August 31, 2024 and sell it today you would lose (149.00) from holding The Coca Cola or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMAZONCOM INC vs. The Coca Cola
Performance |
| Timeline |
| AMAZONCOM INC |
| Coca Cola |
AMAZONCOM and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMAZONCOM and Coca Cola
The main advantage of trading using opposite AMAZONCOM and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMAZONCOM 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.| AMAZONCOM vs. AEP TEX INC | AMAZONCOM vs. US BANK NATIONAL | AMAZONCOM vs. Bank of America | AMAZONCOM vs. GE Aerospace |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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