Correlation Between Coca Cola and Nicholas Global

Can any of the company-specific risk be diversified away by investing in both Coca Cola and Nicholas Global 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 Nicholas Global 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 Nicholas Global Equity, you can compare the effects of market volatilities on Coca Cola and Nicholas Global 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 Nicholas Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Nicholas Global.

Diversification Opportunities for Coca Cola and Nicholas Global

-0.78

Correlation Coefficient

Coca Cola  Nicholas Global

Pay attention - limited upside

The 3 months correlation between Coca and Nicholas is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Nicholas Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Global Equity 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 Nicholas Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Global Equity has no effect on the direction of Coca Cola i.e., Coca Cola and Nicholas Global go up and down completely randomly.

Pair Corralation between Coca Cola and Nicholas Global

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Nicholas Global. In addition to that, Coca Cola is 1.47 times more volatile than Nicholas Global Equity. It trades about -0.2 of its total potential returns per unit of risk. Nicholas Global Equity is currently generating about 0.15 per unit of volatility. If you would invest  1,862  in Nicholas Global Equity on September 12, 2024 and sell it today you would earn a total of  105.00  from holding Nicholas Global Equity or generate 5.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Coca Cola  vs.  Nicholas Global Equity

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 uncertain 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.

Nicholas Global Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nicholas Global Equity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nicholas Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Coca Cola and Nicholas Global

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

The idea behind The Coca Cola and Nicholas Global Equity 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.