Correlation Between PepsiCo and Ambev SA
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Ambev SA 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 Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Ambev SA ADR, you can compare the effects of market volatilities on PepsiCo and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Ambev SA.
Diversification Opportunities for PepsiCo and Ambev SA
Very weak diversification
The 3 months correlation between PepsiCo and Ambev is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of PepsiCo i.e., PepsiCo and Ambev SA go up and down completely randomly.
Pair Corralation between PepsiCo and Ambev SA
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Ambev SA. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.75 times less risky than Ambev SA. The stock trades about -0.07 of its potential returns per unit of risk. The Ambev SA ADR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 220.00 in Ambev SA ADR on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Ambev SA ADR or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Ambev SA ADR
Performance |
| Timeline |
| PepsiCo |
| Ambev SA ADR |
PepsiCo and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Ambev SA
The main advantage of trading using opposite PepsiCo and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Molson Coors Beverage |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |