Correlation Between ATHENE HOLDING and PepsiCo

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

By analyzing existing cross correlation between ATHENE HOLDING PRFSERC and PepsiCo, you can compare the effects of market volatilities on ATHENE HOLDING 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 ATHENE HOLDING with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATHENE HOLDING and PepsiCo.

Diversification Opportunities for ATHENE HOLDING and PepsiCo

0.15

Correlation Coefficient

ATHENE HOLDING  PepsiCo

Average diversification

The 3 months correlation between ATHENE and PepsiCo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ATHENE HOLDING PRFSERC and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and ATHENE HOLDING 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 ATHENE HOLDING PRFSERC 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 has no effect on the direction of ATHENE HOLDING i.e., ATHENE HOLDING and PepsiCo go up and down completely randomly.

Pair Corralation between ATHENE HOLDING and PepsiCo

Assuming the 90 days trading horizon ATHENE HOLDING PRFSERC is expected to under-perform the PepsiCo. But the stock apears to be less risky and, when comparing its historical volatility, ATHENE HOLDING PRFSERC is 1.94 times less risky than PepsiCo. The stock trades about -0.13 of its potential returns per unit of risk. The PepsiCo is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  14,529  in PepsiCo on December 28, 2024 and sell it today you would lose (669.00) from holding PepsiCo or give up 4.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

ATHENE HOLDING PRFSERC  vs.  PepsiCo

ATHENE HOLDING PRFSERC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ATHENE HOLDING PRFSERC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PepsiCo

Risk-Adjusted Performance

Very Weak

Over the last 90 days PepsiCo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PepsiCo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ATHENE HOLDING and PepsiCo

The main advantage of trading using opposite ATHENE HOLDING and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATHENE HOLDING 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 ATHENE HOLDING PRFSERC and PepsiCo 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 CEOs Directory module to screen CEOs from public companies around the world.