Correlation Between PepsiCo and 78409VBL7

Can any of the company-specific risk be diversified away by investing in both PepsiCo and 78409VBL7 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 78409VBL7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PepsiCo and SPGI 37 01 MAR 52, you can compare the effects of market volatilities on PepsiCo and 78409VBL7 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 78409VBL7. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and 78409VBL7.

Diversification Opportunities for PepsiCo and 78409VBL7

0.41

Correlation Coefficient

PepsiCo  78409VBL7

Very weak diversification

The 3 months correlation between PepsiCo and 78409VBL7 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and SPGI 37 01 MAR 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPGI 37 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 78409VBL7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPGI 37 01 has no effect on the direction of PepsiCo i.e., PepsiCo and 78409VBL7 go up and down completely randomly.

Pair Corralation between PepsiCo and 78409VBL7

Considering the 90-day investment horizon PepsiCo is expected to under-perform the 78409VBL7. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.02 times less risky than 78409VBL7. The stock trades about -0.02 of its potential returns per unit of risk. The SPGI 37 01 MAR 52 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,768  in SPGI 37 01 MAR 52 on September 28, 2024 and sell it today you would earn a total of  312.00  from holding SPGI 37 01 MAR 52 or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.48%
Values	Daily Returns

PepsiCo  vs.  SPGI 37 01 MAR 52

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.

SPGI 37 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPGI 37 01 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 78409VBL7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PepsiCo and 78409VBL7

The main advantage of trading using opposite PepsiCo and 78409VBL7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, 78409VBL7 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 78409VBL7 will offset losses from the drop in 78409VBL7's long position.

The idea behind PepsiCo and SPGI 37 01 MAR 52 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.