Correlation Between Coca Cola and US Bancorp

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

Diversification Opportunities for Coca Cola and US Bancorp

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Coca Cola and US Bancorp is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Coca-Cola and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Coca Cola i.e., Coca Cola and US Bancorp go up and down completely randomly.

Pair Corralation between Coca Cola and US Bancorp

Allowing for the 90-day total investment horizon Coca-Cola is expected to generate 0.6 times more return on investment than US Bancorp. However, Coca-Cola is 1.66 times less risky than US Bancorp. It trades about 0.16 of its potential returns per unit of risk. US Bancorp is currently generating about 0.09 per unit of risk. If you would invest  5,967  in Coca-Cola on May 16, 2022 and sell it today you would earn a total of  403.00  from holding Coca-Cola or generate 6.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Coca-Cola  vs.  US Bancorp

 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

US Bancorp 
US Bancorp Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, US Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

US Bancorp Price Channel

Coca Cola and US Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and US Bancorp

The main advantage of trading using opposite Coca Cola and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.
The idea behind Coca-Cola and US Bancorp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

Other Complementary Tools

Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go