Correlation Between Coca Cola and Teucrium Corn

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

Diversification Opportunities for Coca Cola and Teucrium Corn

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Coca Cola and Teucrium is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Coca-Cola and Teucrium Corn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Corn 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 are associated (or correlated) with Teucrium Corn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Corn has no effect on the direction of Coca Cola i.e., Coca Cola and Teucrium Corn go up and down completely randomly.

Pair Corralation between Coca Cola and Teucrium Corn

Allowing for the 90-day total investment horizon Coca-Cola is expected to under-perform the Teucrium Corn. But the stock apears to be less risky and, when comparing its historical volatility, Coca-Cola is 1.18 times less risky than Teucrium Corn. The stock trades about -0.23 of its potential returns per unit of risk. The Teucrium Corn is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,467  in Teucrium Corn on July 7, 2022 and sell it today you would earn a total of  265.00  from holding Teucrium Corn or generate 10.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Coca-Cola  vs.  Teucrium Corn

 Performance (%) 
       Timeline  
Coca-Cola 
Coca Cola Performance
0 of 100
Over the last 90 days Coca-Cola has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Coca Cola Price Channel

Teucrium Corn 
Teucrium Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Teucrium Corn are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Teucrium Corn disclosed solid returns over the last few months and may actually be approaching a breakup point.

Teucrium Price Channel

Coca Cola and Teucrium Corn Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and Teucrium Corn

The main advantage of trading using opposite Coca Cola and Teucrium Corn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Teucrium Corn 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 Teucrium Corn will offset losses from the drop in Teucrium Corn's long position.
Coca Cola vs. Amazon Inc
The idea behind Coca-Cola and Teucrium Corn 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.
Teucrium Corn vs. Bank Of America
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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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