Correlation Between Armada Hflr and PEPSICO

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and PEPSICO 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 Armada Hflr and PEPSICO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and PEPSICO INC 3, you can compare the effects of market volatilities on Armada Hflr and PEPSICO 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 Armada Hflr with a short position of PEPSICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and PEPSICO.

Diversification Opportunities for Armada Hflr and PEPSICO

0.61

Correlation Coefficient

Armada Hflr  PEPSICO

Poor diversification

The 3 months correlation between Armada and PEPSICO is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and PEPSICO INC 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC 3 and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with PEPSICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPSICO INC 3 has no effect on the direction of Armada Hflr i.e., Armada Hflr and PEPSICO go up and down completely randomly.

Pair Corralation between Armada Hflr and PEPSICO

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the PEPSICO. In addition to that, Armada Hflr is 4.4 times more volatile than PEPSICO INC 3. It trades about -0.12 of its total potential returns per unit of risk. PEPSICO INC 3 is currently generating about -0.17 per unit of volatility. If you would invest  9,719  in PEPSICO INC 3 on October 12, 2024 and sell it today you would lose (266.00) from holding PEPSICO INC 3 or give up 2.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Armada Hflr Pr  vs.  PEPSICO INC 3

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

PEPSICO INC 3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPSICO INC 3 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PEPSICO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and PEPSICO

The main advantage of trading using opposite Armada Hflr and PEPSICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, PEPSICO 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 PEPSICO will offset losses from the drop in PEPSICO's long position.

The idea behind Armada Hflr Pr and PEPSICO INC 3 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.

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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 the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.