Correlation Between Zevia Pbc and PepsiCo

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

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

Diversification Opportunities for Zevia Pbc and PepsiCo

-0.38

Correlation Coefficient

Zevia Pbc  PepsiCo

Very good diversification

The 3 months correlation between Zevia and PepsiCo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Zevia Pbc and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Zevia Pbc 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 Zevia Pbc 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 Zevia Pbc i.e., Zevia Pbc and PepsiCo go up and down completely randomly.

Pair Corralation between Zevia Pbc and PepsiCo

Given the investment horizon of 90 days Zevia Pbc is expected to under-perform the PepsiCo. In addition to that, Zevia Pbc is 4.08 times more volatile than PepsiCo. It trades about -0.13 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 29, 2024 and sell it today you would lose (72.00) from holding PepsiCo or give up 0.48% of portfolio value over 90 days.

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

Zevia Pbc  vs.  PepsiCo

Zevia Pbc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zevia Pbc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Zevia Pbc and PepsiCo

The main advantage of trading using opposite Zevia Pbc and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zevia Pbc 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 Zevia Pbc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.