Correlation Between SNDL and PepsiCo

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

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

Diversification Opportunities for SNDL and PepsiCo

-0.5

Correlation Coefficient

SNDL  PepsiCo

Very good diversification

The 3 months correlation between SNDL and PepsiCo is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and SNDL 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 SNDL Inc 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 has no effect on the direction of SNDL i.e., SNDL and PepsiCo go up and down completely randomly.

Pair Corralation between SNDL and PepsiCo

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the PepsiCo. In addition to that, SNDL is 1.78 times more volatile than PepsiCo. It trades about -0.1 of its total potential returns per unit of risk. PepsiCo is currently generating about 0.0 per unit of volatility. If you would invest  15,039  in PepsiCo on December 28, 2024 and sell it today you would lose (112.00) from holding PepsiCo or give up 0.74% of portfolio value over 90 days.

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

SNDL Inc  vs.  PepsiCo

SNDL Inc

Risk-Adjusted Performance

Very Weak

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

PepsiCo

Risk-Adjusted Performance

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SNDL and PepsiCo

The main advantage of trading using opposite SNDL and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL 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 SNDL Inc and PepsiCo 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.