Correlation Between Celsius Holdings and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Celsius Holdings 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 Celsius Holdings and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celsius Holdings and PepsiCo, you can compare the effects of market volatilities on Celsius Holdings 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 Celsius Holdings with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celsius Holdings and PepsiCo.
Diversification Opportunities for Celsius Holdings and PepsiCo
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Celsius and PepsiCo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Celsius Holdings 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 Celsius Holdings 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 Celsius Holdings i.e., Celsius Holdings and PepsiCo go up and down completely randomly.
Pair Corralation between Celsius Holdings and PepsiCo
Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the PepsiCo. In addition to that, Celsius Holdings is 2.91 times more volatile than PepsiCo. It trades about -0.12 of its total potential returns per unit of risk. PepsiCo is currently generating about -0.32 per unit of volatility. If you would invest 17,437 in PepsiCo on August 23, 2024 and sell it today you would lose (1,403) from holding PepsiCo or give up 8.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celsius Holdings vs. PepsiCo
Performance |
| Timeline |
| Celsius Holdings |
| PepsiCo |
Celsius Holdings and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celsius Holdings and PepsiCo
The main advantage of trading using opposite Celsius Holdings and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celsius Holdings 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.| Celsius Holdings vs. Vita Coco | Celsius Holdings vs. Keurig Dr Pepper | Celsius Holdings vs. PepsiCo | Celsius Holdings vs. Coca Cola Femsa SAB |
| PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Coca Cola Femsa SAB | PepsiCo vs. Vita Coco |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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