Correlation Between Coca Cola and 3M
Can any of the company-specific risk be diversified away by investing in both Coca Cola and 3M 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 3M 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 3M Company, you can compare the effects of market volatilities on Coca Cola and 3M 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 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and 3M.
Diversification Opportunities for Coca Cola and 3M
Average diversification
The 3 months correlation between Coca and 3M is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company 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 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of Coca Cola i.e., Coca Cola and 3M go up and down completely randomly.
Pair Corralation between Coca Cola and 3M
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 33.96 times less return on investment than 3M. But when comparing it to its historical volatility, The Coca Cola is 2.24 times less risky than 3M. It trades about 0.0 of its potential returns per unit of risk. 3M Company is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,666 in 3M Company on January 19, 2024 and sell it today you would earn a total of 1,482 from holding 3M Company or generate 19.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Coca Cola vs. 3M Company
Performance |
Timeline |
Coca Cola |
3M Company |
Coca Cola and 3M Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and 3M
The main advantage of trading using opposite Coca Cola and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, 3M 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 3M will offset losses from the drop in 3M's long position.Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Stocks Directory Find actively traded stocks across global markets |