Correlation Between PepsiCo and Forsys Metals

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

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

Diversification Opportunities for PepsiCo and Forsys Metals

-0.07

Correlation Coefficient

PepsiCo  Forsys Metals

Good diversification

The 3 months correlation between PepsiCo and Forsys is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp 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 Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of PepsiCo i.e., PepsiCo and Forsys Metals go up and down completely randomly.

Pair Corralation between PepsiCo and Forsys Metals

Considering the 90-day investment horizon PepsiCo is expected to under-perform the Forsys Metals. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 4.57 times less risky than Forsys Metals. The stock trades about -0.03 of its potential returns per unit of risk. The Forsys Metals Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Forsys Metals Corp on December 21, 2024 and sell it today you would lose (2.00) from holding Forsys Metals Corp or give up 4.76% of portfolio value over 90 days.

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

PepsiCo  vs.  Forsys Metals Corp

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.

Forsys Metals Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forsys Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Forsys Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PepsiCo and Forsys Metals

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

The idea behind PepsiCo and Forsys Metals Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.