Correlation Between Twitter and Coca Cola

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

Diversification Opportunities for Twitter and Coca Cola

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Twitter and Coca Cola is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Twitter and Coca-Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola and Twitter 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 Twitter 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 has no effect on the direction of Twitter i.e., Twitter and Coca Cola go up and down completely randomly.

Pair Corralation between Twitter and Coca Cola

Given the investment horizon of 90 days Twitter is expected to generate 1.06 times less return on investment than Coca Cola. In addition to that, Twitter is 2.87 times more volatile than Coca-Cola. It trades about 0.02 of its total potential returns per unit of risk. Coca-Cola is currently generating about 0.06 per unit of volatility. If you would invest  4,685  in Coca-Cola on May 20, 2022 and sell it today you would earn a total of  1,803  from holding Coca-Cola or generate 38.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Twitter  vs.  Coca-Cola

 Performance (%) 
       Timeline  
Twitter 
Twitter Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Twitter are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Twitter reported solid returns over the last few months and may actually be approaching a breakup point.

Twitter Price Channel

Coca-Cola 
Coca Cola Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coca-Cola are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Coca Cola Price Channel

Twitter and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Twitter and Coca Cola

The main advantage of trading using opposite Twitter and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twitter 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.
The idea behind Twitter and Coca-Cola 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

Other Complementary Tools

Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go