Correlation Between Coca Cola and Morguard

Can any of the company-specific risk be diversified away by investing in both Coca Cola and Morguard 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 Morguard into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coca Cola CDR and Morguard, you can compare the effects of market volatilities on Coca Cola and Morguard 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 Morguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Morguard.

Diversification Opportunities for Coca Cola and Morguard

-0.48

Correlation Coefficient

Coca Cola  Morguard

Very good diversification

The 3 months correlation between Coca and Morguard is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola CDR and Morguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morguard 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 CDR are associated (or correlated) with Morguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morguard has no effect on the direction of Coca Cola i.e., Coca Cola and Morguard go up and down completely randomly.

Pair Corralation between Coca Cola and Morguard

Assuming the 90 days trading horizon Coca Cola CDR is expected to under-perform the Morguard. In addition to that, Coca Cola is 1.19 times more volatile than Morguard. It trades about -0.06 of its total potential returns per unit of risk. Morguard is currently generating about 0.08 per unit of volatility. If you would invest  11,405  in Morguard on May 5, 2025 and sell it today you would earn a total of  480.00  from holding Morguard or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Coca Cola CDR  vs.  Morguard

Coca Cola CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coca Cola CDR has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Morguard

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morguard are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Morguard is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Coca Cola and Morguard

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

The idea behind Coca Cola CDR and Morguard 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.