Correlation Between Coca Cola and Teradata Corp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Teradata Corp 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 Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca-Cola and Teradata Corp, you can compare the effects of market volatilities on Coca Cola and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Teradata Corp.

Diversification Opportunities for Coca Cola and Teradata Corp

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Coca Cola and Teradata is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Coca-Cola and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Coca Cola i.e., Coca Cola and Teradata Corp go up and down completely randomly.

Pair Corralation between Coca Cola and Teradata Corp

Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.87 times less return on investment than Teradata Corp. But when comparing it to its historical volatility, Coca-Cola is 3.35 times less risky than Teradata Corp. It trades about 0.07 of its potential returns per unit of risk. Teradata Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,484  in Teradata Corp on May 14, 2022 and sell it today you would earn a total of  1,089  from holding Teradata Corp or generate 43.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Coca-Cola  vs.  Teradata Corp

 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 quite persistent basic indicators, Coca Cola is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Coca Cola Price Channel

Teradata Corp 
Teradata Performance
0 of 100
Over the last 90 days Teradata Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Teradata Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Teradata Price Channel

Coca Cola and Teradata Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and Teradata Corp

The main advantage of trading using opposite Coca Cola and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.
The idea behind Coca-Cola and Teradata Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Complementary Tools

Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
CEO Directory
Screen CEOs from public companies around the world
Go