Correlation Between Radian and Coca Cola

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

Diversification Opportunities for Radian and Coca Cola

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Radian and Coca is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Radian Group and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Radian 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 Radian Group 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 has no effect on the direction of Radian i.e., Radian and Coca Cola go up and down completely randomly.

Pair Corralation between Radian and Coca Cola

Considering the 90-day investment horizon Radian Group is expected to under-perform the Coca Cola. In addition to that, Radian is 2.16 times more volatile than The Coca Cola. It trades about -0.26 of its total potential returns per unit of risk. The Coca Cola is currently generating about -0.03 per unit of volatility. If you would invest  6,049  in The Coca Cola on January 22, 2024 and sell it today you would lose (32.00) from holding The Coca Cola or give up 0.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Radian Group  vs.  The Coca Cola

 Performance 
       Timeline  
Radian Group 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Radian Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Radian is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.
Coca Cola 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Coca Cola is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Radian and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Radian and Coca Cola

The main advantage of trading using opposite Radian and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radian 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 Radian Group and The Coca Cola 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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