Correlation Between Hooker Furniture and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture 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 Hooker Furniture and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and PepsiCo, you can compare the effects of market volatilities on Hooker Furniture 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 Hooker Furniture with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and PepsiCo.
Diversification Opportunities for Hooker Furniture and PepsiCo
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hooker and PepsiCo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture i.e., Hooker Furniture and PepsiCo go up and down completely randomly.
Pair Corralation between Hooker Furniture and PepsiCo
Given the investment horizon of 90 days Hooker Furniture is expected to generate 2.74 times more return on investment than PepsiCo. However, Hooker Furniture is 2.74 times more volatile than PepsiCo. It trades about 0.03 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest 1,587 in Hooker Furniture on August 31, 2024 and sell it today you would earn a total of 286.00 from holding Hooker Furniture or generate 18.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. PepsiCo
Performance |
| Timeline |
| Hooker Furniture |
| PepsiCo |
Hooker Furniture and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and PepsiCo
The main advantage of trading using opposite Hooker Furniture and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture 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.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
| PepsiCo vs. Monster Beverage Corp | PepsiCo vs. RLJ Lodging Trust | PepsiCo vs. Aquagold International | PepsiCo vs. Stepstone Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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