Correlation Between Chart Industries and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Chart Industries 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 Chart Industries and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chart Industries and PepsiCo, you can compare the effects of market volatilities on Chart Industries 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 Chart Industries with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and PepsiCo.
Diversification Opportunities for Chart Industries and PepsiCo
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chart and PepsiCo is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Chart Industries 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 Chart Industries 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 Chart Industries i.e., Chart Industries and PepsiCo go up and down completely randomly.
Pair Corralation between Chart Industries and PepsiCo
Given the investment horizon of 90 days Chart Industries is expected to generate 3.24 times more return on investment than PepsiCo. However, Chart Industries is 3.24 times more volatile than PepsiCo. It trades about 0.03 of its potential returns per unit of risk. PepsiCo is currently generating about -0.03 per unit of risk. If you would invest 16,720 in Chart Industries on September 12, 2024 and sell it today you would earn a total of 2,488 from holding Chart Industries or generate 14.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chart Industries vs. PepsiCo
Performance |
| Timeline |
| Chart Industries |
| PepsiCo |
Chart Industries and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chart Industries and PepsiCo
The main advantage of trading using opposite Chart Industries and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chart Industries 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.| Chart Industries vs. Franklin Electric Co | Chart Industries vs. Graco Inc | Chart Industries vs. IDEX Corporation | Chart Industries vs. Ingersoll Rand |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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