Correlation Between Coca Cola and Norwegian Cruise

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

Diversification Opportunities for Coca Cola and Norwegian Cruise

  Correlation Coefficient

Good diversification

The 3 months correlation between Coca Cola and Norwegian is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Coca-Cola and Norwegian Cruise Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Cruise Ord 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 Norwegian Cruise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Cruise Ord has no effect on the direction of Coca Cola i.e., Coca Cola and Norwegian Cruise go up and down completely randomly.

Pair Corralation between Coca Cola and Norwegian Cruise

Allowing for the 90-day total investment horizon Coca-Cola is expected to generate 0.25 times more return on investment than Norwegian Cruise. However, Coca-Cola is 3.98 times less risky than Norwegian Cruise. It trades about 0.0 of its potential returns per unit of risk. Norwegian Cruise Ord is currently generating about -0.02 per unit of risk. If you would invest  5,650  in Coca-Cola on July 9, 2022 and sell it today you would lose (147.00)  from holding Coca-Cola or give up 2.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Coca-Cola  vs.  Norwegian Cruise Ord

 Performance (%) 
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

Norwegian Cruise Ord 
Norwegian Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Norwegian Cruise Ord are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Norwegian Cruise reported solid returns over the last few months and may actually be approaching a breakup point.

Norwegian Price Channel

Coca Cola and Norwegian Cruise Volatility Contrast

   Predicted Return Density   

Pair Trading with Coca Cola and Norwegian Cruise

The main advantage of trading using opposite Coca Cola and Norwegian Cruise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Norwegian Cruise 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 Norwegian Cruise will offset losses from the drop in Norwegian Cruise's long position.
Coca Cola vs. Amazon Inc
The idea behind Coca-Cola and Norwegian Cruise Ord 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.
Norwegian Cruise vs. Amazon Inc
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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