Correlation Between Coca Cola and VMware
Can any of the company-specific risk be diversified away by investing in both Coca Cola and VMware 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 VMware 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 VMware Inc, you can compare the effects of market volatilities on Coca Cola and VMware 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 VMware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and VMware.
Diversification Opportunities for Coca Cola and VMware
Good diversification
The 3 months correlation between Coca and VMware is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and VMware Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VMware Inc 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 VMware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VMware Inc has no effect on the direction of Coca Cola i.e., Coca Cola and VMware go up and down completely randomly.
Pair Corralation between Coca Cola and VMware
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.43 times more return on investment than VMware. However, The Coca Cola is 2.31 times less risky than VMware. It trades about 0.0 of its potential returns per unit of risk. VMware Inc is currently generating about -0.05 per unit of risk. If you would invest 6,101 in The Coca Cola on January 24, 2024 and sell it today you would lose (46.00) from holding The Coca Cola or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 44.86% |
| Values | Daily Returns |
The Coca Cola vs. VMware Inc
Performance |
| Timeline |
| Coca Cola |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Coca Cola and VMware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and VMware
The main advantage of trading using opposite Coca Cola and VMware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, VMware 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 VMware will offset losses from the drop in VMware'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 |
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 Stocks Directory module to find actively traded stocks across global markets.
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