Correlation Between PEPSICO and ChampionX

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

By analyzing existing cross correlation between PEPSICO INC 55 and ChampionX, you can compare the effects of market volatilities on PEPSICO and ChampionX 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 ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPSICO and ChampionX.

Diversification Opportunities for PEPSICO and ChampionX

0.33

Correlation Coefficient

PEPSICO  ChampionX

Weak diversification

The 3 months correlation between PEPSICO and ChampionX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PEPSICO INC 55 and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 INC 55 are associated (or correlated) with ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of PEPSICO i.e., PEPSICO and ChampionX go up and down completely randomly.

Pair Corralation between PEPSICO and ChampionX

Assuming the 90 days trading horizon PEPSICO INC 55 is expected to generate 0.93 times more return on investment than ChampionX. However, PEPSICO INC 55 is 1.08 times less risky than ChampionX. It trades about 0.14 of its potential returns per unit of risk. ChampionX is currently generating about -0.38 per unit of risk. If you would invest  10,398  in PEPSICO INC 55 on September 27, 2024 and sell it today you would earn a total of  389.00  from holding PEPSICO INC 55 or generate 3.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.36%
Values	Daily Returns

PEPSICO INC 55  vs.  ChampionX

PEPSICO INC 55

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPSICO INC 55 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.

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PEPSICO and ChampionX

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

The idea behind PEPSICO INC 55 and ChampionX 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.