Correlation Between PepsiCo and Grupo Hotelero
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Grupo Hotelero 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 Grupo Hotelero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Grupo Hotelero Santa, you can compare the effects of market volatilities on PepsiCo and Grupo Hotelero 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 Grupo Hotelero. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Grupo Hotelero.
Diversification Opportunities for PepsiCo and Grupo Hotelero
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PepsiCo and Grupo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Grupo Hotelero Santa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Hotelero Santa 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 Grupo Hotelero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Hotelero Santa has no effect on the direction of PepsiCo i.e., PepsiCo and Grupo Hotelero go up and down completely randomly.
Pair Corralation between PepsiCo and Grupo Hotelero
Assuming the 90 days trading horizon PepsiCo is expected to generate 2.08 times less return on investment than Grupo Hotelero. But when comparing it to its historical volatility, PepsiCo is 1.6 times less risky than Grupo Hotelero. It trades about 0.01 of its potential returns per unit of risk. Grupo Hotelero Santa is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 381.00 in Grupo Hotelero Santa on September 14, 2024 and sell it today you would lose (21.00) from holding Grupo Hotelero Santa or give up 5.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Grupo Hotelero Santa
Performance |
| Timeline |
| PepsiCo |
| Grupo Hotelero Santa |
PepsiCo and Grupo Hotelero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Grupo Hotelero
The main advantage of trading using opposite PepsiCo and Grupo Hotelero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Grupo Hotelero 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 Grupo Hotelero will offset losses from the drop in Grupo Hotelero's long position.| PepsiCo vs. Grupo Sports World | PepsiCo vs. Delta Air Lines | PepsiCo vs. Applied Materials | PepsiCo vs. Hoteles City Express |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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