Correlation Between PepsiCo and ChampionX
Can any of the company-specific risk be diversified away by investing in both PepsiCo and ChampionX 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 ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and ChampionX, you can compare the effects of market volatilities on PepsiCo and ChampionX 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 ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and ChampionX.
Diversification Opportunities for PepsiCo and ChampionX
Very good diversification
The 3 months correlation between PepsiCo and ChampionX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of PepsiCo i.e., PepsiCo and ChampionX go up and down completely randomly.
Pair Corralation between PepsiCo and ChampionX
Considering the 90-day investment horizon PepsiCo is expected to under-perform the ChampionX. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.9 times less risky than ChampionX. The stock trades about 0.0 of its potential returns per unit of risk. The ChampionX is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,855 in ChampionX on September 4, 2024 and sell it today you would earn a total of 219.00 from holding ChampionX or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. ChampionX
Performance |
| Timeline |
| PepsiCo |
| ChampionX |
PepsiCo and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and ChampionX
The main advantage of trading using opposite PepsiCo and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| ChampionX vs. Geospace Technologies | ChampionX vs. Weatherford International PLC | ChampionX vs. Enerflex | ChampionX vs. RPC Inc |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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