Correlation Between Carsales and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Carsales 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 Carsales and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and The Coca Cola, you can compare the effects of market volatilities on Carsales 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 Carsales with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Coca Cola.
Diversification Opportunities for Carsales and Coca Cola
Excellent diversification
The 3 months correlation between Carsales and Coca is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Carsales 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 CarsalesCom 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 Carsales i.e., Carsales and Coca Cola go up and down completely randomly.
Pair Corralation between Carsales and Coca Cola
Assuming the 90 days horizon CarsalesCom is expected to generate 1.9 times more return on investment than Coca Cola. However, Carsales is 1.9 times more volatile than The Coca Cola. It trades about 0.11 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.05 per unit of risk. If you would invest 1,376 in CarsalesCom on September 4, 2024 and sell it today you would earn a total of 1,164 from holding CarsalesCom or generate 84.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
CarsalesCom vs. The Coca Cola
Performance |
| Timeline |
| CarsalesCom |
| Coca Cola |
Carsales and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Coca Cola
The main advantage of trading using opposite Carsales and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales 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.| Carsales vs. BRIT AMER TOBACCO | Carsales vs. Japan Tobacco | Carsales vs. MICRONIC MYDATA | Carsales vs. FUYO GENERAL LEASE |
| Coca Cola vs. Steel Dynamics | Coca Cola vs. Eidesvik Offshore ASA | Coca Cola vs. COSMOSTEEL HLDGS | Coca Cola vs. American Eagle Outfitters |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |