Correlation Between Compania Cervecerias and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias 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 Compania Cervecerias and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Cervecerias Unidas and PepsiCo, you can compare the effects of market volatilities on Compania Cervecerias 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 Compania Cervecerias with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and PepsiCo.
Diversification Opportunities for Compania Cervecerias and PepsiCo
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compania and PepsiCo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Compania Cervecerias 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 Compania Cervecerias Unidas 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 Compania Cervecerias i.e., Compania Cervecerias and PepsiCo go up and down completely randomly.
Pair Corralation between Compania Cervecerias and PepsiCo
Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 1.41 times more return on investment than PepsiCo. However, Compania Cervecerias is 1.41 times more volatile than PepsiCo. It trades about 0.08 of its potential returns per unit of risk. PepsiCo is currently generating about -0.02 per unit of risk. If you would invest 1,115 in Compania Cervecerias Unidas on November 28, 2024 and sell it today you would earn a total of 247.50 from holding Compania Cervecerias Unidas or generate 22.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Cervecerias Unidas vs. PepsiCo
Performance |
| Timeline |
| Compania Cervecerias |
| PepsiCo |
Compania Cervecerias and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Cervecerias and PepsiCo
The main advantage of trading using opposite Compania Cervecerias and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias 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.| Compania Cervecerias vs. Boston Beer | Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Ambev SA ADR | Compania Cervecerias vs. Molson Coors Brewing |
| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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