Correlation Between Vertex Energy and Coca Cola

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

Diversification Opportunities for Vertex Energy and Coca Cola

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Vertex and Coca Cola is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vertex Energy and Coca-Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola and Vertex Energy 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 Vertex Energy 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 Vertex Energy i.e., Vertex Energy and Coca Cola go up and down completely randomly.

Pair Corralation between Vertex Energy and Coca Cola

Given the investment horizon of 90 days Vertex Energy is expected to generate 6.17 times more return on investment than Coca Cola. However, Vertex Energy is 6.17 times more volatile than Coca-Cola. It trades about 0.23 of its potential returns per unit of risk. Coca-Cola is currently generating about 0.01 per unit of risk. If you would invest  1,090  in Vertex Energy on May 10, 2022 and sell it today you would earn a total of  308.00  from holding Vertex Energy or generate 28.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Vertex Energy  vs.  Coca-Cola

 Performance (%) 
       Timeline  
Vertex Energy 
Vertex Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vertex Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Vertex Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Vertex Price Channel

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Coca Cola Price Channel

Vertex Energy and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vertex Energy and Coca Cola

The main advantage of trading using opposite Vertex Energy and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertex Energy 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.

Vertex Energy

Pair trading matchups for Vertex Energy

The idea behind Vertex Energy 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Stock Screener
Find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go