Correlation Between Coca Cola and Marsico Growth

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

Diversification Opportunities for Coca Cola and Marsico Growth

-0.77

Correlation Coefficient

Coca Cola  Marsico Growth

Pay attention - limited upside

The 3 months correlation between Coca and Marsico is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Marsico Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Growth 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 Marsico Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Growth has no effect on the direction of Coca Cola i.e., Coca Cola and Marsico Growth go up and down completely randomly.

Pair Corralation between Coca Cola and Marsico Growth

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Marsico Growth. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.09 times less risky than Marsico Growth. The stock trades about -0.22 of its potential returns per unit of risk. The Marsico Growth Fund is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,494  in Marsico Growth Fund on August 31, 2024 and sell it today you would earn a total of  299.00  from holding Marsico Growth Fund or generate 11.99% 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.  Marsico Growth Fund

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.

Marsico Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Growth Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Marsico Growth may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Coca Cola and Marsico Growth

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

The idea behind The Coca Cola and Marsico Growth Fund 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.