Correlation Between Coca Cola and 031162DJ6

Can any of the company-specific risk be diversified away by investing in both Coca Cola and 031162DJ6 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 031162DJ6 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 AMGN 42 01 MAR 33, you can compare the effects of market volatilities on Coca Cola and 031162DJ6 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 031162DJ6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and 031162DJ6.

Diversification Opportunities for Coca Cola and 031162DJ6

0.81

Correlation Coefficient

Coca Cola  031162DJ6

Very poor diversification

The 3 months correlation between Coca and 031162DJ6 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and AMGN 42 01 MAR 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMGN 42 01 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 031162DJ6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMGN 42 01 has no effect on the direction of Coca Cola i.e., Coca Cola and 031162DJ6 go up and down completely randomly.

Pair Corralation between Coca Cola and 031162DJ6

Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.39 times more return on investment than 031162DJ6. However, Coca Cola is 1.39 times more volatile than AMGN 42 01 MAR 33. It trades about 0.03 of its potential returns per unit of risk. AMGN 42 01 MAR 33 is currently generating about 0.0 per unit of risk. If you would invest  6,193  in The Coca Cola on September 13, 2024 and sell it today you would earn a total of  191.00  from holding The Coca Cola or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.95%
Values	Daily Returns

The Coca Cola  vs.  AMGN 42 01 MAR 33

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.

AMGN 42 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMGN 42 01 MAR 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AMGN 42 01 MAR 33 investors.

Pair Trading with Coca Cola and 031162DJ6

The main advantage of trading using opposite Coca Cola and 031162DJ6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, 031162DJ6 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 031162DJ6 will offset losses from the drop in 031162DJ6's long position.

The idea behind The Coca Cola and AMGN 42 01 MAR 33 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.