Correlation Between KRAFT and Coca Cola
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By analyzing existing cross correlation between KRAFT FOODS GROUP and The Coca Cola, you can compare the effects of market volatilities on KRAFT 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 KRAFT with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRAFT and Coca Cola.
Diversification Opportunities for KRAFT and Coca Cola
Poor diversification
The 3 months correlation between KRAFT and Coca is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KRAFT FOODS 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 KRAFT 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 KRAFT FOODS 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 KRAFT i.e., KRAFT and Coca Cola go up and down completely randomly.
Pair Corralation between KRAFT and Coca Cola
Assuming the 90 days trading horizon KRAFT FOODS GROUP is expected to generate 0.9 times more return on investment than Coca Cola. However, KRAFT FOODS GROUP is 1.11 times less risky than Coca Cola. It trades about -0.09 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.17 per unit of risk. If you would invest 11,177 in KRAFT FOODS GROUP on August 28, 2024 and sell it today you would lose (175.00) from holding KRAFT FOODS GROUP or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
KRAFT FOODS GROUP vs. The Coca Cola
Performance |
| Timeline |
| KRAFT FOODS GROUP |
| Coca Cola |
KRAFT and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRAFT and Coca Cola
The main advantage of trading using opposite KRAFT and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRAFT 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.The idea behind KRAFT FOODS GROUP and The Coca Cola pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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