Correlation Between PepsiCo and Innovative International

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

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

Diversification Opportunities for PepsiCo and Innovative International

-0.34

Correlation Coefficient

PepsiCo  Innovative International

Very good diversification

The 3 months correlation between PepsiCo and Innovative is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Innovative International Acqui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative International 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 Innovative International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative International has no effect on the direction of PepsiCo i.e., PepsiCo and Innovative International go up and down completely randomly.

Pair Corralation between PepsiCo and Innovative International

If you would invest  1,114  in Innovative International Acquisition on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Innovative International Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

PepsiCo  vs.  Innovative International Acqui

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.

Innovative International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovative International Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Innovative International is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PepsiCo and Innovative International

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

The idea behind PepsiCo and Innovative International Acquisition 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.