Correlation Between Bayview Acquisition and Coca Cola

Can any of the company-specific risk be diversified away by investing in both Bayview Acquisition 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 Bayview Acquisition and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bayview Acquisition Corp and Coca Cola Consolidated, you can compare the effects of market volatilities on Bayview Acquisition 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 Bayview Acquisition with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayview Acquisition and Coca Cola.

Diversification Opportunities for Bayview Acquisition and Coca Cola

-0.3

Correlation Coefficient

Bayview Acquisition  Coca Cola

Very good diversification

The 3 months correlation between Bayview and Coca is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bayview Acquisition Corp and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated and Bayview Acquisition 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 Bayview Acquisition 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 Consolidated has no effect on the direction of Bayview Acquisition i.e., Bayview Acquisition and Coca Cola go up and down completely randomly.

Pair Corralation between Bayview Acquisition and Coca Cola

Assuming the 90 days horizon Bayview Acquisition Corp is expected to under-perform the Coca Cola. In addition to that, Bayview Acquisition is 5.59 times more volatile than Coca Cola Consolidated. It trades about -0.02 of its total potential returns per unit of risk. Coca Cola Consolidated is currently generating about -0.01 per unit of volatility. If you would invest  132,621  in Coca Cola Consolidated on September 2, 2024 and sell it today you would lose (2,192) from holding Coca Cola Consolidated or give up 1.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.06%
Values	Daily Returns

Bayview Acquisition Corp  vs.  Coca Cola Consolidated

Bayview Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayview Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Coca Cola Consolidated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola Consolidated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Coca Cola is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bayview Acquisition and Coca Cola

The main advantage of trading using opposite Bayview Acquisition and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayview Acquisition 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.

The idea behind Bayview Acquisition Corp and Coca Cola Consolidated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.