Correlation Between Scholastic and PEPSICO

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

By analyzing existing cross correlation between Scholastic and PEPSICO INC, you can compare the effects of market volatilities on Scholastic and PEPSICO 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 Scholastic with a short position of PEPSICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and PEPSICO.

Diversification Opportunities for Scholastic and PEPSICO

0.45

Correlation Coefficient

Scholastic  PEPSICO

Very weak diversification

The 3 months correlation between Scholastic and PEPSICO is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and PEPSICO INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC and Scholastic 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 Scholastic are associated (or correlated) with PEPSICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPSICO INC has no effect on the direction of Scholastic i.e., Scholastic and PEPSICO go up and down completely randomly.

Pair Corralation between Scholastic and PEPSICO

Given the investment horizon of 90 days Scholastic is expected to under-perform the PEPSICO. But the stock apears to be less risky and, when comparing its historical volatility, Scholastic is 38.19 times less risky than PEPSICO. The stock trades about -0.04 of its potential returns per unit of risk. The PEPSICO INC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,795  in PEPSICO INC on October 16, 2024 and sell it today you would lose (941.00) from holding PEPSICO INC or give up 10.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	76.11%
Values	Daily Returns

Scholastic  vs.  PEPSICO INC

Scholastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scholastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PEPSICO INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Scholastic and PEPSICO

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

The idea behind Scholastic and PEPSICO INC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..