Correlation Between Aquestive Therapeutics and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Aquestive Therapeutics 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 Aquestive Therapeutics and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquestive Therapeutics and PepsiCo, you can compare the effects of market volatilities on Aquestive Therapeutics 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 Aquestive Therapeutics with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquestive Therapeutics and PepsiCo.
Diversification Opportunities for Aquestive Therapeutics and PepsiCo
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aquestive and PepsiCo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Aquestive Therapeutics 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 Aquestive Therapeutics 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 Aquestive Therapeutics i.e., Aquestive Therapeutics and PepsiCo go up and down completely randomly.
Pair Corralation between Aquestive Therapeutics and PepsiCo
Given the investment horizon of 90 days Aquestive Therapeutics is expected to generate 5.18 times more return on investment than PepsiCo. However, Aquestive Therapeutics is 5.18 times more volatile than PepsiCo. It trades about 0.09 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest 91.00 in Aquestive Therapeutics on August 26, 2024 and sell it today you would earn a total of 365.00 from holding Aquestive Therapeutics or generate 401.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aquestive Therapeutics vs. PepsiCo
Performance |
| Timeline |
| Aquestive Therapeutics |
| PepsiCo |
Aquestive Therapeutics and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquestive Therapeutics and PepsiCo
The main advantage of trading using opposite Aquestive Therapeutics and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquestive Therapeutics 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.| Aquestive Therapeutics vs. Capricor Therapeutics | Aquestive Therapeutics vs. Akari Therapeutics PLC | Aquestive Therapeutics vs. Soleno Therapeutics | Aquestive Therapeutics vs. Bio Path Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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