Correlation Between PepsiCo and Coca-Cola FEMSA
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Coca-Cola FEMSA 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 PepsiCo and Coca-Cola FEMSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on PepsiCo and Coca-Cola FEMSA 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 PepsiCo with a short position of Coca-Cola FEMSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Coca-Cola FEMSA.
Diversification Opportunities for PepsiCo and Coca-Cola FEMSA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PepsiCo and Coca-Cola is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA and PepsiCo 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 PepsiCo are associated (or correlated) with Coca-Cola FEMSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola FEMSA has no effect on the direction of PepsiCo i.e., PepsiCo and Coca-Cola FEMSA go up and down completely randomly.
Pair Corralation between PepsiCo and Coca-Cola FEMSA
Assuming the 90 days horizon PepsiCo is expected to generate 2.1 times less return on investment than Coca-Cola FEMSA. In addition to that, PepsiCo is 1.03 times more volatile than Coca Cola FEMSA SAB. It trades about 0.06 of its total potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.12 per unit of volatility. If you would invest 7,400 in Coca Cola FEMSA SAB on September 5, 2024 and sell it today you would earn a total of 250.00 from holding Coca Cola FEMSA SAB or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Coca Cola FEMSA SAB
Performance |
| Timeline |
| PepsiCo |
| Coca Cola FEMSA |
PepsiCo and Coca-Cola FEMSA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Coca-Cola FEMSA
The main advantage of trading using opposite PepsiCo and Coca-Cola FEMSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Coca-Cola FEMSA 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 Coca-Cola FEMSA will offset losses from the drop in Coca-Cola FEMSA's long position.| PepsiCo vs. PLAYMATES TOYS | PepsiCo vs. USWE SPORTS AB | PepsiCo vs. MCEWEN MINING INC | PepsiCo vs. TRAVEL LEISURE DL 01 |
| Coca-Cola FEMSA vs. PepsiCo | Coca-Cola FEMSA vs. Coca Cola European Partners | Coca-Cola FEMSA vs. COCA A HBC | Coca-Cola FEMSA vs. National Beverage Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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