Correlation Between Getty Images and PEPSICO

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

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

Diversification Opportunities for Getty Images and PEPSICO

0.55

Correlation Coefficient

Getty Images  PEPSICO

Very weak diversification

The 3 months correlation between Getty and PEPSICO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Getty Images Holdings and PEPSICO INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC and Getty Images 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 Getty Images 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 Getty Images i.e., Getty Images and PEPSICO go up and down completely randomly.

Pair Corralation between Getty Images and PEPSICO

Given the investment horizon of 90 days Getty Images is expected to generate 1128.33 times less return on investment than PEPSICO. But when comparing it to its historical volatility, Getty Images Holdings is 22.19 times less risky than PEPSICO. It trades about 0.0 of its potential returns per unit of risk. PEPSICO INC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,698  in PEPSICO INC on October 10, 2024 and sell it today you would lose (844.00) from holding PEPSICO INC or give up 9.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.6%
Values	Daily Returns

Getty Images Holdings  vs.  PEPSICO INC

Getty Images Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getty Images Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Getty Images is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 Getty Images and PEPSICO

The main advantage of trading using opposite Getty Images and PEPSICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Images 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 Getty Images 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.