Correlation Between Coca Cola and Lyxor 1

Can any of the company-specific risk be diversified away by investing in both Coca Cola and Lyxor 1 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 Lyxor 1 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 Lyxor 1 , you can compare the effects of market volatilities on Coca Cola and Lyxor 1 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 Lyxor 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Lyxor 1.

Diversification Opportunities for Coca Cola and Lyxor 1

0.08

Correlation Coefficient

Coca Cola  Lyxor 1

Significant diversification

The 3 months correlation between Coca and Lyxor is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Lyxor 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor 1 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 Lyxor 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor 1 has no effect on the direction of Coca Cola i.e., Coca Cola and Lyxor 1 go up and down completely randomly.

Pair Corralation between Coca Cola and Lyxor 1

Assuming the 90 days trading horizon Coca Cola FEMSA SAB is expected to generate 74.99 times more return on investment than Lyxor 1. However, Coca Cola is 74.99 times more volatile than Lyxor 1 . It trades about 0.15 of its potential returns per unit of risk. Lyxor 1 is currently generating about -0.47 per unit of risk. If you would invest  870.00  in Coca Cola FEMSA SAB on January 24, 2024 and sell it today you would lose (15.00) from holding Coca Cola FEMSA SAB or give up 1.72% of portfolio value over 90 days.

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

Coca Cola FEMSA SAB  vs.  Lyxor 1

Coca Cola FEMSA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola FEMSA SAB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Coca Cola reported solid returns over the last few months and may actually be approaching a breakup point.

Lyxor 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyxor 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lyxor 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Coca Cola and Lyxor 1

The main advantage of trading using opposite Coca Cola and Lyxor 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Lyxor 1 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 Lyxor 1 will offset losses from the drop in Lyxor 1's long position.

The idea behind Coca Cola FEMSA SAB and Lyxor 1 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.