Correlation Between Coca Cola and HASBRO

Can any of the company-specific risk be diversified away by investing in both Coca Cola and HASBRO 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 HASBRO 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 HASBRO INC 635, you can compare the effects of market volatilities on Coca Cola and HASBRO 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 HASBRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and HASBRO.

Diversification Opportunities for Coca Cola and HASBRO

0.68

Correlation Coefficient

Coca Cola  HASBRO

Poor diversification

The 3 months correlation between Coca and HASBRO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and HASBRO INC 635 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HASBRO INC 635 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 HASBRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HASBRO INC 635 has no effect on the direction of Coca Cola i.e., Coca Cola and HASBRO go up and down completely randomly.

Pair Corralation between Coca Cola and HASBRO

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the HASBRO. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.34 times less risky than HASBRO. The stock trades about -0.2 of its potential returns per unit of risk. The HASBRO INC 635 is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  10,676  in HASBRO INC 635 on September 12, 2024 and sell it today you would lose (496.00) from holding HASBRO INC 635 or give up 4.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.25%
Values	Daily Returns

The Coca Cola  vs.  HASBRO INC 635

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.

HASBRO INC 635

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HASBRO INC 635 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HASBRO 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 HASBRO

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

The idea behind The Coca Cola and HASBRO INC 635 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.