Correlation Between Exxon and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and The Coca Cola, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Coca Cola.
Diversification Opportunities for Exxon and Coca Cola
Good diversification
The 3 months correlation between Exxon and Coca is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and Coca Cola go up and down completely randomly.
Pair Corralation between Exxon and Coca Cola
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.72 times more return on investment than Coca Cola. However, Exxon is 1.72 times more volatile than The Coca Cola. It trades about 0.02 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.01 per unit of risk. If you would invest 10,163 in Exxon Mobil Corp on September 13, 2024 and sell it today you would earn a total of 1,029 from holding Exxon Mobil Corp or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. The Coca Cola
Performance |
| Timeline |
| Exxon Mobil Corp |
| Coca Cola |
Exxon and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Coca Cola
The main advantage of trading using opposite Exxon and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Aquagold International | Exxon vs. Thrivent High Yield | Exxon vs. Morningstar Unconstrained Allocation | Exxon vs. Via Renewables |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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