Correlation Between Coca Cola and Newage

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Can any of the company-specific risk be diversified away by investing in both Coca Cola and Newage 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 Newage 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 Newage Inc, you can compare the effects of market volatilities on Coca Cola and Newage 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 Newage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Newage.

Diversification Opportunities for Coca Cola and Newage

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Coca and Newage is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Coca-Cola and Newage Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newage Inc 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 Newage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newage Inc has no effect on the direction of Coca Cola i.e., Coca Cola and Newage go up and down completely randomly.

Pair Corralation between Coca Cola and Newage

If you would invest  5,992  in The Coca Cola on December 30, 2023 and sell it today you would earn a total of  126.00  from holding The Coca Cola or generate 2.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy4.55%
ValuesDaily Returns

The Coca-Cola  vs.  Newage Inc

 Performance 
       Timeline  
Coca-Cola 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 5 (%) 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.
Newage Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Newage Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Newage is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Coca Cola and Newage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and Newage

The main advantage of trading using opposite Coca Cola and Newage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Newage 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 Newage will offset losses from the drop in Newage's long position.
The idea behind The Coca Cola and Newage Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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