Correlation Between DXC Technology and PepsiCo
Can any of the company-specific risk be diversified away by investing in both DXC Technology 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 DXC Technology and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology and PepsiCo, you can compare the effects of market volatilities on DXC Technology 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 DXC Technology with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and PepsiCo.
Diversification Opportunities for DXC Technology and PepsiCo
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DXC and PepsiCo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and DXC Technology 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 DXC Technology 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 DXC Technology i.e., DXC Technology and PepsiCo go up and down completely randomly.
Pair Corralation between DXC Technology and PepsiCo
Assuming the 90 days trading horizon DXC Technology is expected to generate 63.36 times less return on investment than PepsiCo. But when comparing it to its historical volatility, DXC Technology is 81.73 times less risky than PepsiCo. It trades about 0.06 of its potential returns per unit of risk. PepsiCo is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 278,975 in PepsiCo on September 12, 2024 and sell it today you would earn a total of 44,141 from holding PepsiCo or generate 15.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
DXC Technology vs. PepsiCo
Performance |
| Timeline |
| DXC Technology |
| PepsiCo |
DXC Technology and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and PepsiCo
The main advantage of trading using opposite DXC Technology and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology 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.| DXC Technology vs. GMxico Transportes SAB | DXC Technology vs. Micron Technology | DXC Technology vs. Monster Beverage Corp | DXC Technology vs. Verizon Communications |
| PepsiCo vs. Monster Beverage Corp | PepsiCo vs. McEwen Mining | PepsiCo vs. Taiwan Semiconductor Manufacturing | PepsiCo vs. DXC Technology |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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