Correlation Between CENTURIA OFFICE and Coca Cola

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

By analyzing existing cross correlation between CENTURIA OFFICE REIT and The Coca Cola, you can compare the effects of market volatilities on CENTURIA OFFICE 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 CENTURIA OFFICE with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and Coca Cola.

Diversification Opportunities for CENTURIA OFFICE and Coca Cola

0.68

Correlation Coefficient

CENTURIA OFFICE  Coca Cola

Poor diversification

The 3 months correlation between CENTURIA and Coca is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and CENTURIA OFFICE 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 CENTURIA OFFICE REIT 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 CENTURIA OFFICE i.e., CENTURIA OFFICE and Coca Cola go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and Coca Cola

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to under-perform the Coca Cola. In addition to that, CENTURIA OFFICE is 1.68 times more volatile than The Coca Cola. It trades about -0.01 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  5,833  in The Coca Cola on September 29, 2024 and sell it today you would earn a total of  173.00  from holding The Coca Cola or generate 2.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CENTURIA OFFICE REIT  vs.  The Coca Cola

CENTURIA OFFICE REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTURIA OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Coca Cola is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CENTURIA OFFICE and Coca Cola

The main advantage of trading using opposite CENTURIA OFFICE and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTURIA OFFICE 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 CENTURIA OFFICE REIT 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.