Correlation Between PepsiCo and High Performance

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

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

Diversification Opportunities for PepsiCo and High Performance

0.0

Correlation Coefficient

PepsiCo  High Performance

Pay attention - limited upside

The 3 months correlation between PepsiCo and High is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and High Performance Beverages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Performance Bev 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 High Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Performance Bev has no effect on the direction of PepsiCo i.e., PepsiCo and High Performance go up and down completely randomly.

Pair Corralation between PepsiCo and High Performance

Considering the 90-day investment horizon PepsiCo is expected to under-perform the High Performance. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 158.01 times less risky than High Performance. The stock trades about -0.05 of its potential returns per unit of risk. The High Performance Beverages is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.00  in High Performance Beverages on October 7, 2024 and sell it today you would earn a total of  0.00  from holding High Performance Beverages or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

PepsiCo  vs.  High Performance Beverages

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.

High Performance Bev

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PepsiCo and High Performance

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

The idea behind PepsiCo and High Performance Beverages 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.