Correlation Between Coca Cola and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Grocery Outlet 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 Grocery Outlet 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 Grocery Outlet Holding, you can compare the effects of market volatilities on Coca Cola and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Grocery Outlet.
Diversification Opportunities for Coca Cola and Grocery Outlet
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Grocery is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Coca Cola i.e., Coca Cola and Grocery Outlet go up and down completely randomly.
Pair Corralation between Coca Cola and Grocery Outlet
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.32 times more return on investment than Grocery Outlet. However, The Coca Cola is 3.12 times less risky than Grocery Outlet. It trades about 0.21 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.16 per unit of risk. If you would invest 6,886 in The Coca Cola on June 23, 2024 and sell it today you would earn a total of 278.00 from holding The Coca Cola or generate 4.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
The Coca Cola vs. Grocery Outlet Holding
Performance |
Timeline |
Coca Cola |
Grocery Outlet Holding |
Coca Cola and Grocery Outlet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca Cola and Grocery Outlet
The main advantage of trading using opposite Coca Cola and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet'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 |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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