Correlation Between Banco De and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Banco De 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 Banco De and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco de Valores and The Coca Cola, you can compare the effects of market volatilities on Banco De 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 Banco De with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Coca Cola.
Diversification Opportunities for Banco De and Coca Cola
Good diversification
The 3 months correlation between Banco and Coca is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Valores and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Banco De 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 Banco de Valores 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 Banco De i.e., Banco De and Coca Cola go up and down completely randomly.
Pair Corralation between Banco De and Coca Cola
Assuming the 90 days trading horizon Banco de Valores is expected to under-perform the Coca Cola. But the stock apears to be less risky and, when comparing its historical volatility, Banco de Valores is 1.49 times less risky than Coca Cola. The stock trades about -0.16 of its potential returns per unit of risk. The The Coca Cola is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,455,000 in The Coca Cola on November 2, 2024 and sell it today you would earn a total of 55,000 from holding The Coca Cola or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco de Valores vs. The Coca Cola
Performance |
| Timeline |
| Banco de Valores |
| Coca Cola |
Banco De and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco De and Coca Cola
The main advantage of trading using opposite Banco De and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De 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.| Banco De vs. Harmony Gold Mining | Banco De vs. Agrometal SAI | Banco De vs. Transportadora de Gas | Banco De vs. Telecom Argentina |
| Coca Cola vs. Grimoldi SA | Coca Cola vs. Transportadora de Gas | Coca Cola vs. Alphabet Inc Class A CEDEAR | Coca Cola vs. International Business Machines |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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