Correlation Between Lenovo Group and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Lenovo Group 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 Lenovo Group and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lenovo Group Limited and PepsiCo, you can compare the effects of market volatilities on Lenovo Group 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 Lenovo Group with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and PepsiCo.
Diversification Opportunities for Lenovo Group and PepsiCo
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lenovo and PepsiCo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Lenovo Group 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 Lenovo Group Limited 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 Lenovo Group i.e., Lenovo Group and PepsiCo go up and down completely randomly.
Pair Corralation between Lenovo Group and PepsiCo
Assuming the 90 days trading horizon Lenovo Group Limited is expected to generate 2.92 times more return on investment than PepsiCo. However, Lenovo Group is 2.92 times more volatile than PepsiCo. It trades about 0.02 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest 2,166 in Lenovo Group Limited on September 28, 2024 and sell it today you would earn a total of 134.00 from holding Lenovo Group Limited or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenovo Group Limited vs. PepsiCo
Performance |
| Timeline |
| Lenovo Group Limited |
| PepsiCo |
Lenovo Group and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and PepsiCo
The main advantage of trading using opposite Lenovo Group and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group 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.| Lenovo Group vs. Apple Inc | Lenovo Group vs. Apple Inc | Lenovo Group vs. Apple Inc | Lenovo Group vs. Apple Inc |
| PepsiCo vs. THAI BEVERAGE | PepsiCo vs. AM EAGLE OUTFITTERS | PepsiCo vs. SENECA FOODS A | PepsiCo vs. TYSON FOODS A |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Commodity Directory Find actively traded commodities issued by global exchanges |