Correlation Between PepsiCo and Zevia Pbc

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

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

Diversification Opportunities for PepsiCo and Zevia Pbc

-0.78

Correlation Coefficient

PepsiCo  Zevia Pbc

Pay attention - limited upside

The 3 months correlation between PepsiCo and Zevia is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Zevia Pbc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zevia Pbc 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 Zevia Pbc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zevia Pbc has no effect on the direction of PepsiCo i.e., PepsiCo and Zevia Pbc go up and down completely randomly.

Pair Corralation between PepsiCo and Zevia Pbc

Considering the 90-day investment horizon PepsiCo is expected to under-perform the Zevia Pbc. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 7.38 times less risky than Zevia Pbc. The stock trades about -0.08 of its potential returns per unit of risk. The Zevia Pbc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Zevia Pbc on August 30, 2024 and sell it today you would earn a total of  120.00  from holding Zevia Pbc or generate 118.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PepsiCo  vs.  Zevia Pbc

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 relatively invariable technical and fundamental indicators, PepsiCo is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Zevia Pbc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zevia Pbc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Zevia Pbc sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PepsiCo and Zevia Pbc

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

The idea behind PepsiCo and Zevia Pbc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.