Correlation Between PepsiCo and Air Transport
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Air Transport Services, you can compare the effects of market volatilities on PepsiCo and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Air Transport.
Diversification Opportunities for PepsiCo and Air Transport
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PepsiCo and Air is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of PepsiCo i.e., PepsiCo and Air Transport go up and down completely randomly.
Pair Corralation between PepsiCo and Air Transport
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Air Transport. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 4.87 times less risky than Air Transport. The stock trades about -0.23 of its potential returns per unit of risk. The Air Transport Services is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,619 in Air Transport Services on August 25, 2024 and sell it today you would earn a total of 577.00 from holding Air Transport Services or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Air Transport Services
Performance |
| Timeline |
| PepsiCo |
| Air Transport Services |
PepsiCo and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Air Transport
The main advantage of trading using opposite PepsiCo and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |