Correlation Between PepsiCo and 126408HH9

Can any of the company-specific risk be diversified away by investing in both PepsiCo and 126408HH9 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 126408HH9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PepsiCo and CSX P 325, you can compare the effects of market volatilities on PepsiCo and 126408HH9 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 126408HH9. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and 126408HH9.

Diversification Opportunities for PepsiCo and 126408HH9

0.68

Correlation Coefficient

PepsiCo  126408HH9

Poor diversification

The 3 months correlation between PepsiCo and 126408HH9 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and CSX P 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX P 325 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 126408HH9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX P 325 has no effect on the direction of PepsiCo i.e., PepsiCo and 126408HH9 go up and down completely randomly.

Pair Corralation between PepsiCo and 126408HH9

Considering the 90-day investment horizon PepsiCo is expected to under-perform the 126408HH9. In addition to that, PepsiCo is 3.29 times more volatile than CSX P 325. It trades about -0.02 of its total potential returns per unit of risk. CSX P 325 is currently generating about 0.0 per unit of volatility. If you would invest  9,579  in CSX P 325 on October 13, 2024 and sell it today you would lose (38.00) from holding CSX P 325 or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

PepsiCo  vs.  CSX P 325

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.

CSX P 325

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSX P 325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 126408HH9 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PepsiCo and 126408HH9

The main advantage of trading using opposite PepsiCo and 126408HH9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, 126408HH9 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 126408HH9 will offset losses from the drop in 126408HH9's long position.

The idea behind PepsiCo and CSX P 325 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.