diversifiable risk of combining Coca Cola and Fevertree Drinks 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 Fevertree Drinks Plc, you can compare the effects of market volatilities on Coca Cola and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Fevertree Drinks.
Diversification Opportunities for Coca Cola and Fevertree Drinks
Pair Corralation between Coca Cola and Fevertree Drinks
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 2.14 times less return on investment than Fevertree Drinks. But when comparing it to its historical volatility, The Coca Cola is 2.74 times less risky than Fevertree Drinks. It trades about 0.12 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,253 in Fevertree Drinks Plc on November 24, 2023 and sell it today you would earn a total of 57.00 from holding Fevertree Drinks Plc or generate 4.55% return on investment over 90 days.
|3 Months [change]
The Coca-Cola vs. Fevertree Drinks Plc
Coca Cola and Fevertree Drinks Volatility Contrast
Pair Trading with Coca Cola and Fevertree DrinksThe main advantage of trading using opposite Coca Cola and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position. The idea behind The Coca Cola and Fevertree Drinks Plc 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.
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 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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