Correlation Between PepsiCo and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Compania Cervecerias 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 Compania Cervecerias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Compania Cervecerias Unidas, you can compare the effects of market volatilities on PepsiCo and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Compania Cervecerias.
Diversification Opportunities for PepsiCo and Compania Cervecerias
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PepsiCo and Compania is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of PepsiCo i.e., PepsiCo and Compania Cervecerias go up and down completely randomly.
Pair Corralation between PepsiCo and Compania Cervecerias
Considering the 90-day investment horizon PepsiCo is expected to generate 0.6 times more return on investment than Compania Cervecerias. However, PepsiCo is 1.65 times less risky than Compania Cervecerias. It trades about -0.01 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about -0.04 per unit of risk. If you would invest 17,515 in PepsiCo on September 2, 2024 and sell it today you would lose (1,170) from holding PepsiCo or give up 6.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| PepsiCo |
| Compania Cervecerias |
PepsiCo and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Compania Cervecerias
The main advantage of trading using opposite PepsiCo and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Compania Cervecerias vs. Boston Beer | Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Ambev SA ADR | Compania Cervecerias vs. Molson Coors Brewing |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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