Correlation Between Coca Cola and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Coca Cola and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio SP, you can compare the effects of market volatilities on Coca Cola and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and SPDR Portfolio.
Diversification Opportunities for Coca Cola and SPDR Portfolio
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coca and SPDR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Coca Cola i.e., Coca Cola and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Coca Cola and SPDR Portfolio
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the SPDR Portfolio. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.04 times less risky than SPDR Portfolio. The stock trades about -0.01 of its potential returns per unit of risk. The SPDR Portfolio SP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,558 in SPDR Portfolio SP on January 25, 2024 and sell it today you would earn a total of 1,492 from holding SPDR Portfolio SP or generate 26.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Coca Cola vs. SPDR Portfolio SP
Performance |
Timeline |
Coca Cola |
SPDR Portfolio SP |
Coca Cola and SPDR Portfolio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and SPDR Portfolio
The main advantage of trading using opposite Coca Cola and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio'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 |
SPDR Portfolio vs. Northern Lights | SPDR Portfolio vs. Dimensional International High | SPDR Portfolio vs. First Trust Exchange Traded | SPDR Portfolio vs. EA Series Trust |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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