Correlation Between Coca Cola and Lesico
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Lesico 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 Lesico 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 Lesico, you can compare the effects of market volatilities on Coca Cola and Lesico 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 Lesico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Lesico.
Diversification Opportunities for Coca Cola and Lesico
Very good diversification
The 3 months correlation between Coca and Lesico is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Lesico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesico 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 Lesico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesico has no effect on the direction of Coca Cola i.e., Coca Cola and Lesico go up and down completely randomly.
Pair Corralation between Coca Cola and Lesico
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 9.84 times less return on investment than Lesico. But when comparing it to its historical volatility, The Coca Cola is 2.78 times less risky than Lesico. It trades about 0.09 of its potential returns per unit of risk. Lesico is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 29,890 in Lesico on January 26, 2024 and sell it today you would earn a total of 3,980 from holding Lesico or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
The Coca Cola vs. Lesico
Performance |
| Timeline |
| Coca Cola |
| Lesico |
Coca Cola and Lesico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Lesico
The main advantage of trading using opposite Coca Cola and Lesico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Lesico 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 Lesico will offset losses from the drop in Lesico's long position.| Coca Cola vs. Aquagold International | Coca Cola vs. Morningstar Unconstrained Allocation | Coca Cola vs. Thrivent High Yield | Coca Cola vs. Via Renewables |
| Lesico vs. Amir Marketing and | Lesico vs. Magic Software Enterprises | Lesico vs. Kvasir Education | Lesico vs. Bio Meat Foodtech |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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