Correlation Between PEPSICO and Siriuspoint

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

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

Diversification Opportunities for PEPSICO and Siriuspoint

-0.43

Correlation Coefficient

PEPSICO  Siriuspoint

Very good diversification

The 3 months correlation between PEPSICO and Siriuspoint is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PEPSICO INC and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of PEPSICO i.e., PEPSICO and Siriuspoint go up and down completely randomly.

Pair Corralation between PEPSICO and Siriuspoint

Assuming the 90 days trading horizon PEPSICO INC is expected to generate 0.99 times more return on investment than Siriuspoint. However, PEPSICO INC is 1.01 times less risky than Siriuspoint. It trades about 0.1 of its potential returns per unit of risk. Siriuspoint is currently generating about 0.04 per unit of risk. If you would invest  7,786  in PEPSICO INC on September 26, 2024 and sell it today you would earn a total of  589.00  from holding PEPSICO INC or generate 7.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.37%
Values	Daily Returns

PEPSICO INC  vs.  Siriuspoint

PEPSICO INC

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PEPSICO INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PEPSICO is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Siriuspoint

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siriuspoint has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Siriuspoint is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PEPSICO and Siriuspoint

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

The idea behind PEPSICO INC and Siriuspoint 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.