Correlation Between PepsiCo and 694308KB2

Can any of the company-specific risk be diversified away by investing in both PepsiCo and 694308KB2 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 694308KB2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PepsiCo and PCG 42 01 MAR 29, you can compare the effects of market volatilities on PepsiCo and 694308KB2 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 694308KB2. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and 694308KB2.

Diversification Opportunities for PepsiCo and 694308KB2

0.65

Correlation Coefficient

PepsiCo  694308KB2

Poor diversification

The 3 months correlation between PepsiCo and 694308KB2 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and PCG 42 01 MAR 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCG 42 01 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 694308KB2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCG 42 01 has no effect on the direction of PepsiCo i.e., PepsiCo and 694308KB2 go up and down completely randomly.

Pair Corralation between PepsiCo and 694308KB2

Considering the 90-day investment horizon PepsiCo is expected to under-perform the 694308KB2. In addition to that, PepsiCo is 1.47 times more volatile than PCG 42 01 MAR 29. It trades about -0.09 of its total potential returns per unit of risk. PCG 42 01 MAR 29 is currently generating about 0.04 per unit of volatility. If you would invest  9,527  in PCG 42 01 MAR 29 on October 22, 2024 and sell it today you would earn a total of  240.00  from holding PCG 42 01 MAR 29 or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.4%
Values	Daily Returns

PepsiCo  vs.  PCG 42 01 MAR 29

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.

PCG 42 01

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PCG 42 01 MAR 29 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 694308KB2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PepsiCo and 694308KB2

The main advantage of trading using opposite PepsiCo and 694308KB2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, 694308KB2 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 694308KB2 will offset losses from the drop in 694308KB2's long position.

The idea behind PepsiCo and PCG 42 01 MAR 29 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.