Correlation Between PEPSICO and BRP

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

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

Diversification Opportunities for PEPSICO and BRP

0.26

Correlation Coefficient

PEPSICO  BRP

Modest diversification

The 3 months correlation between PEPSICO and BRP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding PEPSICO INC and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of PEPSICO i.e., PEPSICO and BRP go up and down completely randomly.

Pair Corralation between PEPSICO and BRP

Assuming the 90 days trading horizon PEPSICO INC is expected to generate 0.2 times more return on investment than BRP. However, PEPSICO INC is 5.05 times less risky than BRP. It trades about 0.0 of its potential returns per unit of risk. BRP Inc is currently generating about -0.03 per unit of risk. If you would invest  9,075  in PEPSICO INC on October 12, 2024 and sell it today you would earn a total of  48.00  from holding PEPSICO INC or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

PEPSICO INC  vs.  BRP Inc

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

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with PEPSICO and BRP

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

The idea behind PEPSICO INC and BRP 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.