Correlation Between PepsiCo and Falcons Beyond

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

By analyzing existing cross correlation between PepsiCo and Falcons Beyond Global,, you can compare the effects of market volatilities on PepsiCo and Falcons Beyond 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 Falcons Beyond. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Falcons Beyond.

Diversification Opportunities for PepsiCo and Falcons Beyond

0.6

Correlation Coefficient

PepsiCo  Falcons Beyond

Poor diversification

The 3 months correlation between PepsiCo and Falcons is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, 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 Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of PepsiCo i.e., PepsiCo and Falcons Beyond go up and down completely randomly.

Pair Corralation between PepsiCo and Falcons Beyond

Considering the 90-day investment horizon PepsiCo is expected to under-perform the Falcons Beyond. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 19.79 times less risky than Falcons Beyond. The stock trades about -0.27 of its potential returns per unit of risk. The Falcons Beyond Global, is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  95.00  in Falcons Beyond Global, on October 7, 2024 and sell it today you would lose (17.00) from holding Falcons Beyond Global, or give up 17.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.0%
Values	Daily Returns

PepsiCo  vs.  Falcons Beyond Global,

PepsiCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PepsiCo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Falcons Beyond Global,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PepsiCo and Falcons Beyond

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

The idea behind PepsiCo and Falcons Beyond Global, 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.