Correlation Between Coca Cola and National Storage
Can any of the company-specific risk be diversified away by investing in both Coca Cola and National Storage 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 National Storage 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 National Storage Affiliates, you can compare the effects of market volatilities on Coca Cola and National Storage 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 National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and National Storage.
Diversification Opportunities for Coca Cola and National Storage
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Coca and National is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff 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 National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of Coca Cola i.e., Coca Cola and National Storage go up and down completely randomly.
Pair Corralation between Coca Cola and National Storage
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.28 times more return on investment than National Storage. However, The Coca Cola is 3.61 times less risky than National Storage. It trades about -0.15 of its potential returns per unit of risk. National Storage Affiliates is currently generating about -0.04 per unit of risk. If you would invest 6,023 in The Coca Cola on January 19, 2024 and sell it today you would lose (132.00) from holding The Coca Cola or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. National Storage Affiliates
Performance |
| Timeline |
| Coca Cola |
| National Storage Aff |
Coca Cola and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and National Storage
The main advantage of trading using opposite Coca Cola and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| National Storage vs. Extra Space Storage | National Storage vs. Americold Realty Trust | National Storage vs. Public Storage | National Storage vs. Terreno Realty |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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