Correlation Between PepsiCo and Bitcoin Depot

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

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

Diversification Opportunities for PepsiCo and Bitcoin Depot

-0.14

Correlation Coefficient

PepsiCo  Bitcoin Depot

Good diversification

The 3 months correlation between PepsiCo and Bitcoin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Bitcoin Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Depot and PepsiCo 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 PepsiCo are associated (or correlated) with Bitcoin Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Depot has no effect on the direction of PepsiCo i.e., PepsiCo and Bitcoin Depot go up and down completely randomly.

Pair Corralation between PepsiCo and Bitcoin Depot

Considering the 90-day investment horizon PepsiCo is expected to under-perform the Bitcoin Depot. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 2.65 times less risky than Bitcoin Depot. The stock trades about -0.01 of its potential returns per unit of risk. The Bitcoin Depot is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  161.00  in Bitcoin Depot on December 27, 2024 and sell it today you would lose (2.00) from holding Bitcoin Depot or give up 1.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

PepsiCo  vs.  Bitcoin Depot

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. Even with relatively invariable technical and fundamental indicators, PepsiCo is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Bitcoin Depot

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Depot are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bitcoin Depot is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PepsiCo and Bitcoin Depot

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

The idea behind PepsiCo and Bitcoin Depot 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.