Correlation Between AVITA Medical and PepsiCo
Can any of the company-specific risk be diversified away by investing in both AVITA Medical 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 AVITA Medical and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and PepsiCo, you can compare the effects of market volatilities on AVITA Medical 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 AVITA Medical with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and PepsiCo.
Diversification Opportunities for AVITA Medical and PepsiCo
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AVITA and PepsiCo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and AVITA Medical 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 AVITA Medical 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 AVITA Medical i.e., AVITA Medical and PepsiCo go up and down completely randomly.
Pair Corralation between AVITA Medical and PepsiCo
Assuming the 90 days trading horizon AVITA Medical is expected to generate 3.95 times more return on investment than PepsiCo. However, AVITA Medical is 3.95 times more volatile than PepsiCo. It trades about 0.03 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest 204.00 in AVITA Medical on September 28, 2024 and sell it today you would earn a total of 22.00 from holding AVITA Medical or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. PepsiCo
Performance |
| Timeline |
| AVITA Medical |
| PepsiCo |
AVITA Medical and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and PepsiCo
The main advantage of trading using opposite AVITA Medical and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical 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.| AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc |
| PepsiCo vs. THAI BEVERAGE | PepsiCo vs. AM EAGLE OUTFITTERS | PepsiCo vs. SENECA FOODS A | PepsiCo vs. TYSON FOODS A |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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