Correlation Between Chemours and PEPSICO

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

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

Diversification Opportunities for Chemours and PEPSICO

0.42

Correlation Coefficient

Chemours  PEPSICO

Very weak diversification

The 3 months correlation between Chemours and PEPSICO is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co 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 Chemours 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 Chemours Co 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 Chemours i.e., Chemours and PEPSICO go up and down completely randomly.

Pair Corralation between Chemours and PEPSICO

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the PEPSICO. In addition to that, Chemours is 12.96 times more volatile than PEPSICO INC 3. It trades about -0.04 of its total potential returns per unit of risk. PEPSICO INC 3 is currently generating about 0.03 per unit of volatility. If you would invest  9,464  in PEPSICO INC 3 on September 29, 2024 and sell it today you would earn a total of  74.00  from holding PEPSICO INC 3 or generate 0.78% return on investment over 90 days.

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

Chemours Co  vs.  PEPSICO INC 3

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chemours and PEPSICO

The main advantage of trading using opposite Chemours and PEPSICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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 Chemours Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.