Correlation Between Coca Cola and Intel

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

By analyzing existing cross correlation between Coca Cola Femsa SAB and Intel, you can compare the effects of market volatilities on Coca Cola and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Intel.

Diversification Opportunities for Coca Cola and Intel

0.06

Correlation Coefficient

Coca Cola  Intel

Significant diversification

The 3 months correlation between Coca and Intel is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Femsa SAB and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Coca Cola Femsa SAB are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Coca Cola i.e., Coca Cola and Intel go up and down completely randomly.

Pair Corralation between Coca Cola and Intel

Considering the 90-day investment horizon Coca Cola Femsa SAB is expected to generate 0.65 times more return on investment than Intel. However, Coca Cola Femsa SAB is 1.53 times less risky than Intel. It trades about 0.01 of its potential returns per unit of risk. Intel is currently generating about 0.0 per unit of risk. If you would invest  8,573  in Coca Cola Femsa SAB on March 17, 2024 and sell it today you would earn a total of  47.00  from holding Coca Cola Femsa SAB or generate 0.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Coca Cola Femsa SAB  vs.  Intel

Coca Cola Femsa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola Femsa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Coca Cola and Intel

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

The idea behind Coca Cola Femsa SAB and Intel 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.