Correlation Between LUMI GRUPPEN and PepsiCo
Can any of the company-specific risk be diversified away by investing in both LUMI GRUPPEN 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 LUMI GRUPPEN and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LUMI GRUPPEN AS and PepsiCo, you can compare the effects of market volatilities on LUMI GRUPPEN 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 LUMI GRUPPEN with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUMI GRUPPEN and PepsiCo.
Diversification Opportunities for LUMI GRUPPEN and PepsiCo
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LUMI and PepsiCo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding LUMI GRUPPEN AS and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and LUMI GRUPPEN 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 LUMI GRUPPEN AS 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 LUMI GRUPPEN i.e., LUMI GRUPPEN and PepsiCo go up and down completely randomly.
Pair Corralation between LUMI GRUPPEN and PepsiCo
Assuming the 90 days horizon LUMI GRUPPEN AS is expected to generate 6.36 times more return on investment than PepsiCo. However, LUMI GRUPPEN is 6.36 times more volatile than PepsiCo. It trades about 0.04 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest 96.00 in LUMI GRUPPEN AS on September 28, 2024 and sell it today you would earn a total of 11.00 from holding LUMI GRUPPEN AS or generate 11.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LUMI GRUPPEN AS vs. PepsiCo
Performance |
Timeline |
LUMI GRUPPEN AS |
PepsiCo |
LUMI GRUPPEN and PepsiCo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LUMI GRUPPEN and PepsiCo
The main advantage of trading using opposite LUMI GRUPPEN and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LUMI GRUPPEN 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.LUMI GRUPPEN vs. IDP EDUCATION LTD | LUMI GRUPPEN vs. TAL Education Group | LUMI GRUPPEN vs. Grand Canyon Education | LUMI GRUPPEN vs. Graham Holdings Co |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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