Correlation Between Eni SPA and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Eni SPA 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 Eni SPA and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eni SpA ADR and Coca Cola Consolidated, you can compare the effects of market volatilities on Eni SPA 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 Eni SPA with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Coca Cola.
Diversification Opportunities for Eni SPA and Coca Cola
Very good diversification
The 3 months correlation between Eni and Coca is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated and Eni SPA 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 Eni SpA ADR 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 Consolidated has no effect on the direction of Eni SPA i.e., Eni SPA and Coca Cola go up and down completely randomly.
Pair Corralation between Eni SPA and Coca Cola
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the Coca Cola. But the stock apears to be less risky and, when comparing its historical volatility, Eni SpA ADR is 2.41 times less risky than Coca Cola. The stock trades about -0.05 of its potential returns per unit of risk. The Coca Cola Consolidated is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 83,949 in Coca Cola Consolidated on March 13, 2024 and sell it today you would earn a total of 17,455 from holding Coca Cola Consolidated or generate 20.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Eni SpA ADR vs. Coca Cola Consolidated
Performance |
Timeline |
Eni SpA ADR |
Coca Cola Consolidated |
Eni SPA and Coca Cola Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eni SPA and Coca Cola
The main advantage of trading using opposite Eni SPA and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA 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.Eni SPA vs. Jpmorgan Equity Index | Eni SPA vs. Wearable Devices | Eni SPA vs. Ribbon Communications | Eni SPA vs. MACOM Technology Solutions |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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