Correlation Between 47216FAA5 and Coca Cola

Can any of the company-specific risk be diversified away by investing in both 47216FAA5 and Coca Cola 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 47216FAA5 and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US47216FAA57 and The Coca Cola, you can compare the effects of market volatilities on 47216FAA5 and Coca Cola 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 47216FAA5 with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of 47216FAA5 and Coca Cola.

Diversification Opportunities for 47216FAA5 and Coca Cola

0.43

Correlation Coefficient

47216FAA5  Coca Cola

Very weak diversification

The 3 months correlation between 47216FAA5 and Coca is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding US47216FAA57 and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and 47216FAA5 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 US47216FAA57 are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of 47216FAA5 i.e., 47216FAA5 and Coca Cola go up and down completely randomly.

Pair Corralation between 47216FAA5 and Coca Cola

Assuming the 90 days trading horizon US47216FAA57 is expected to under-perform the Coca Cola. But the bond apears to be less risky and, when comparing its historical volatility, US47216FAA57 is 1.39 times less risky than Coca Cola. The bond trades about -0.01 of its potential returns per unit of risk. The The Coca Cola is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,238  in The Coca Cola on September 29, 2024 and sell it today you would earn a total of  7.00  from holding The Coca Cola or generate 0.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

US47216FAA57  vs.  The Coca Cola

US47216FAA57

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US47216FAA57 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 47216FAA5 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with 47216FAA5 and Coca Cola

The main advantage of trading using opposite 47216FAA5 and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 47216FAA5 position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.

The idea behind US47216FAA57 and The Coca Cola 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.