Correlation Between Coca Cola and Vmware

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

Diversification Opportunities for Coca Cola and Vmware

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Coca Cola and Vmware is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Coca-Cola and Vmware Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vmware Inc 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 Vmware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vmware Inc has no effect on the direction of Coca Cola i.e., Coca Cola and Vmware go up and down completely randomly.

Pair Corralation between Coca Cola and Vmware

Allowing for the 90-day total investment horizon Coca Cola is expected to generate 2.18 times less return on investment than Vmware. But when comparing it to its historical volatility, Coca-Cola is 1.2 times less risky than Vmware. It trades about 0.23 of its potential returns per unit of risk. Vmware Inc is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  11,090  in Vmware Inc on May 17, 2022 and sell it today you would earn a total of  1,152  from holding Vmware Inc or generate 10.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Coca-Cola  vs.  Vmware Inc

 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

Vmware Inc 
Vmware Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vmware Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, Vmware showed solid returns over the last few months and may actually be approaching a breakup point.

Vmware Price Channel

Coca Cola and Vmware Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and Vmware

The main advantage of trading using opposite Coca Cola and Vmware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Vmware 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 Vmware will offset losses from the drop in Vmware's long position.
The idea behind Coca-Cola and Vmware Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go