Correlation Between Vita Coco and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Vita Coco 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 Vita Coco and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and PepsiCo, you can compare the effects of market volatilities on Vita Coco 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 Vita Coco with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and PepsiCo.
Diversification Opportunities for Vita Coco and PepsiCo
Very good diversification
The 3 months correlation between Vita and PepsiCo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and PepsiCo go up and down completely randomly.
Pair Corralation between Vita Coco and PepsiCo
Given the investment horizon of 90 days Vita Coco is expected to generate 2.03 times more return on investment than PepsiCo. However, Vita Coco is 2.03 times more volatile than PepsiCo. It trades about 0.21 of its potential returns per unit of risk. PepsiCo is currently generating about -0.12 per unit of risk. If you would invest 2,488 in Vita Coco on November 2, 2024 and sell it today you would earn a total of 1,320 from holding Vita Coco or generate 53.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vita Coco vs. PepsiCo
Performance |
| Timeline |
| Vita Coco |
| PepsiCo |
Vita Coco and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vita Coco and PepsiCo
The main advantage of trading using opposite Vita Coco and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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.| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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