Correlation Between United Utilities and Coca Cola
Can any of the company-specific risk be diversified away by investing in both United Utilities 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 Utilities 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 Utilities Group and The Coca Cola, you can compare the effects of market volatilities on United Utilities 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 Utilities with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Coca Cola.
Diversification Opportunities for United Utilities and Coca Cola
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Coca is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities 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 Utilities 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 Utilities 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 Utilities i.e., United Utilities and Coca Cola go up and down completely randomly.
Pair Corralation between United Utilities and Coca Cola
Assuming the 90 days horizon United Utilities Group is expected to generate 1.0 times more return on investment than Coca Cola. However, United Utilities is 1.0 times more volatile than The Coca Cola. It trades about 0.0 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.15 per unit of risk. If you would invest 1,401 in United Utilities Group on October 31, 2024 and sell it today you would lose (7.00) from holding United Utilities Group or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. The Coca Cola
Performance |
| Timeline |
| United Utilities |
| Coca Cola |
United Utilities and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Coca Cola
The main advantage of trading using opposite United Utilities and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities 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 Utilities vs. Artesian Resources | United Utilities vs. Global Water Resources | United Utilities vs. Essential Utilities | United Utilities vs. American Water Works |
| Coca Cola vs. PepsiCo | Coca Cola vs. Vita Coco | Coca Cola vs. Aquagold International | Coca Cola vs. Thrivent High Yield |
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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