Correlation Between First Trust and Coca Cola
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Japan and The Coca Cola, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Coca Cola.
Diversification Opportunities for First Trust and Coca Cola
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Coca is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Japan and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and First Trust 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 First Trust Japan 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 First Trust i.e., First Trust and Coca Cola go up and down completely randomly.
Pair Corralation between First Trust and Coca Cola
Considering the 90-day investment horizon First Trust Japan is expected to under-perform the Coca Cola. In addition to that, First Trust is 1.06 times more volatile than The Coca Cola. It trades about -0.23 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.09 per unit of volatility. If you would invest 6,054 in The Coca Cola on January 26, 2024 and sell it today you would earn a total of 101.00 from holding The Coca Cola or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Japan vs. The Coca Cola
Performance |
| Timeline |
| First Trust Japan |
| Coca Cola |
First Trust and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Coca Cola
The main advantage of trading using opposite First Trust and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. WisdomTree Europe Hedged | First Trust vs. WisdomTree Europe SmallCap | First Trust vs. iShares MSCI Germany |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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