Correlation Between ATT and Coca Cola

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

Diversification Opportunities for ATT and Coca Cola

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between ATT and Coca Cola is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Coca Cola Europacific Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Europacific and ATT 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 ATT Inc are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Europacific has no effect on the direction of ATT i.e., ATT and Coca Cola go up and down completely randomly.

Pair Corralation between ATT and Coca Cola

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Coca Cola. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.1 times less risky than Coca Cola. The stock trades about -0.04 of its potential returns per unit of risk. The Coca Cola Europacific is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,807  in Coca Cola Europacific on July 7, 2022 and sell it today you would lose (191.00)  from holding Coca Cola Europacific or give up 3.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Coca Cola Europacific Partners

 Performance (%) 
       Timeline  
ATT Inc 
ATT Performance
0 of 100
Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in November 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ATT Price Channel

Coca Cola Europacific 
Coca Cola Performance
0 of 100
Over the last 90 days Coca Cola Europacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Coca Cola Price Channel

ATT and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Coca Cola

The main advantage of trading using opposite ATT and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.
ATT vs. Amazon Inc
The idea behind ATT Inc and Coca Cola Europacific 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.
Coca Cola 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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