Correlation Between National Vision and PEPSICO

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

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

Diversification Opportunities for National Vision and PEPSICO

-0.15

Correlation Coefficient

National Vision  PEPSICO

Good diversification

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

Pair Corralation between National Vision and PEPSICO

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the PEPSICO. In addition to that, National Vision is 6.79 times more volatile than PEPSICO INC. It trades about -0.24 of its total potential returns per unit of risk. PEPSICO INC is currently generating about -0.18 per unit of volatility. If you would invest  9,263  in PEPSICO INC on September 29, 2024 and sell it today you would lose (140.00) from holding PEPSICO INC or give up 1.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

National Vision Holdings  vs.  PEPSICO INC

National Vision Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Vision Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, National Vision is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

PEPSICO INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPSICO INC 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 National Vision and PEPSICO

The main advantage of trading using opposite National Vision and PEPSICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision 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 National Vision Holdings and PEPSICO INC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.