Correlation Between Aegon Funding and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Aegon Funding 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 Aegon Funding and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegon Funding and PepsiCo, you can compare the effects of market volatilities on Aegon Funding 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 Aegon Funding with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon Funding and PepsiCo.
Diversification Opportunities for Aegon Funding and PepsiCo
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aegon and PepsiCo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aegon Funding and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Aegon Funding 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 Aegon Funding 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 Aegon Funding i.e., Aegon Funding and PepsiCo go up and down completely randomly.
Pair Corralation between Aegon Funding and PepsiCo
Given the investment horizon of 90 days Aegon Funding is expected to generate 0.84 times more return on investment than PepsiCo. However, Aegon Funding is 1.19 times less risky than PepsiCo. It trades about 0.05 of its potential returns per unit of risk. PepsiCo is currently generating about -0.02 per unit of risk. If you would invest 2,019 in Aegon Funding on September 13, 2024 and sell it today you would earn a total of 92.50 from holding Aegon Funding or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon Funding vs. PepsiCo
Performance |
| Timeline |
| Aegon Funding |
| PepsiCo |
Aegon Funding and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon Funding and PepsiCo
The main advantage of trading using opposite Aegon Funding and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon Funding 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.| Aegon Funding vs. PepsiCo | Aegon Funding vs. Mayfair Gold Corp | Aegon Funding vs. HF Sinclair Corp | Aegon Funding vs. Primo Brands |
| PepsiCo vs. Coca Cola Femsa SAB | PepsiCo vs. Keurig Dr Pepper | PepsiCo vs. Embotelladora Andina SA | PepsiCo vs. Coca Cola European Partners |
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 Stocks Directory module to find actively traded stocks across global markets.
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