Correlation Between BG Foods and Coca Cola

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Can any of the company-specific risk be diversified away by investing in both BG Foods 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 BG Foods and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods and Coca Cola Femsa SAB, you can compare the effects of market volatilities on BG Foods 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 BG Foods with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Coca Cola.

Diversification Opportunities for BG Foods and Coca Cola

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between BGS and Coca is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and Coca-Cola Femsa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola Femsa SAB and BG Foods 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 BG Foods 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 Femsa SAB has no effect on the direction of BG Foods i.e., BG Foods and Coca Cola go up and down completely randomly.

Pair Corralation between BG Foods and Coca Cola

Considering the 90-day investment horizon BG Foods is expected to under-perform the Coca Cola. In addition to that, BG Foods is 2.16 times more volatile than Coca Cola Femsa SAB. It trades about -0.02 of its total potential returns per unit of risk. Coca Cola Femsa SAB is currently generating about 0.07 per unit of volatility. If you would invest  7,838  in Coca Cola Femsa SAB on December 30, 2023 and sell it today you would earn a total of  1,882  from holding Coca Cola Femsa SAB or generate 24.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BG Foods  vs.  Coca-Cola Femsa SAB

 Performance 
       Timeline  
BG Foods 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in BG Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, BG Foods may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Coca-Cola Femsa SAB 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Femsa SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Coca Cola is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

BG Foods and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BG Foods and Coca Cola

The main advantage of trading using opposite BG Foods and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods 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.
The idea behind BG Foods and Coca Cola Femsa SAB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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