Correlation Between Scotts and Coca Cola
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By analyzing existing cross correlation between Scotts Miracle Gro 525 and The Coca Cola, you can compare the effects of market volatilities on Scotts 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 Scotts with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotts and Coca Cola.
Diversification Opportunities for Scotts and Coca Cola
Poor diversification
The 3 months correlation between Scotts and Coca is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Scotts Miracle Gro 525 and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Scotts 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 Scotts Miracle Gro 525 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 Scotts i.e., Scotts and Coca Cola go up and down completely randomly.
Pair Corralation between Scotts and Coca Cola
Assuming the 90 days trading horizon Scotts is expected to generate 13.41 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Scotts Miracle Gro 525 is 1.51 times less risky than Coca Cola. It trades about 0.01 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,107 in The Coca Cola on August 28, 2024 and sell it today you would earn a total of 331.00 from holding The Coca Cola or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.65% |
| Values | Daily Returns |
Scotts Miracle Gro 525 vs. The Coca Cola
Performance |
| Timeline |
| Scotts Miracle Gro |
| Coca Cola |
Scotts and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scotts and Coca Cola
The main advantage of trading using opposite Scotts and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotts 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.| Scotts vs. The Coca Cola | Scotts vs. JPMorgan Chase Co | Scotts vs. Dupont De Nemours | Scotts vs. Alcoa Corp |
| 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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