Correlation Between PepsiCo and Loop Media

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

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

Diversification Opportunities for PepsiCo and Loop Media

0.86

Correlation Coefficient

PepsiCo  Loop Media

Very poor diversification

The 3 months correlation between PepsiCo and Loop is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Loop Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Media 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 Loop Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Media has no effect on the direction of PepsiCo i.e., PepsiCo and Loop Media go up and down completely randomly.

Pair Corralation between PepsiCo and Loop Media

If you would invest  5.30  in Loop Media on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Loop Media or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	5.26%
Values	Daily Returns

PepsiCo  vs.  Loop Media

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Loop Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PepsiCo and Loop Media

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

The idea behind PepsiCo and Loop Media 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.