Correlation Between Bank of America and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and The Coca Cola, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Coca Cola.
Diversification Opportunities for Bank of America and Coca Cola
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Coca is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Bank of America 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 Bank of America 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 has no effect on the direction of Bank of America i.e., Bank of America and Coca Cola go up and down completely randomly.
Pair Corralation between Bank of America and Coca Cola
Considering the 90-day investment horizon Bank of America is expected to generate 2.01 times more return on investment than Coca Cola. However, Bank of America is 2.01 times more volatile than The Coca Cola. It trades about 0.12 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.03 per unit of risk. If you would invest 3,686 in Bank of America on January 25, 2024 and sell it today you would earn a total of 151.00 from holding Bank of America or generate 4.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. The Coca Cola
Performance |
Timeline |
Bank of America |
Coca Cola |
Bank of America and Coca Cola Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Coca Cola
The main advantage of trading using opposite Bank of America and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |