Correlation Between Coca Cola and AmerisourceBergen

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

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

Diversification Opportunities for Coca Cola and AmerisourceBergen

-0.94

Correlation Coefficient

Coca Cola  AmerisourceBergen

Pay attention - limited upside

The 3 months correlation between Coca and AmerisourceBergen is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and AmerisourceBergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmerisourceBergen and Coca Cola 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 The Coca Cola are associated (or correlated) with AmerisourceBergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmerisourceBergen has no effect on the direction of Coca Cola i.e., Coca Cola and AmerisourceBergen go up and down completely randomly.

Pair Corralation between Coca Cola and AmerisourceBergen

If you would invest  19,145  in AmerisourceBergen on August 30, 2024 and sell it today you would earn a total of  0.00  from holding AmerisourceBergen or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.35%
Values	Daily Returns

The Coca Cola  vs.  AmerisourceBergen

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

AmerisourceBergen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Coca Cola and AmerisourceBergen

The main advantage of trading using opposite Coca Cola and AmerisourceBergen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, AmerisourceBergen 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 AmerisourceBergen will offset losses from the drop in AmerisourceBergen's long position.

The idea behind The Coca Cola and AmerisourceBergen 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.