Correlation Between Oatly Group and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Oatly 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 Oatly Group and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oatly Group AB and PepsiCo, you can compare the effects of market volatilities on Oatly 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 Oatly Group with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oatly Group and PepsiCo.
Diversification Opportunities for Oatly Group and PepsiCo
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oatly and PepsiCo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Oatly 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 Oatly Group AB 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 Oatly Group i.e., Oatly Group and PepsiCo go up and down completely randomly.
Pair Corralation between Oatly Group and PepsiCo
Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the PepsiCo. In addition to that, Oatly Group is 4.91 times more volatile than PepsiCo. It trades about -0.03 of its total potential returns per unit of risk. PepsiCo is currently generating about -0.02 per unit of volatility. If you would invest 16,528 in PepsiCo on November 7, 2024 and sell it today you would lose (2,179) from holding PepsiCo or give up 13.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oatly Group AB vs. PepsiCo
Performance |
| Timeline |
| Oatly Group AB |
| PepsiCo |
Oatly Group and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oatly Group and PepsiCo
The main advantage of trading using opposite Oatly Group and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oatly 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.| Oatly Group vs. General Mills | Oatly Group vs. Campbell Soup | Oatly Group vs. ConAgra Foods | Oatly Group vs. Hormel Foods |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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