Correlation Between PepsiCo and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Copa Holdings 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 Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Copa Holdings SA, you can compare the effects of market volatilities on PepsiCo and Copa Holdings 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 Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Copa Holdings.
Diversification Opportunities for PepsiCo and Copa Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PepsiCo and Copa is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA 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 Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of PepsiCo i.e., PepsiCo and Copa Holdings go up and down completely randomly.
Pair Corralation between PepsiCo and Copa Holdings
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Copa Holdings. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 2.58 times less risky than Copa Holdings. The stock trades about -0.11 of its potential returns per unit of risk. The Copa Holdings SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 9,543 in Copa Holdings SA on August 28, 2024 and sell it today you would lose (253.00) from holding Copa Holdings SA or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Copa Holdings SA
Performance |
| Timeline |
| PepsiCo |
| Copa Holdings SA |
PepsiCo and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Copa Holdings
The main advantage of trading using opposite PepsiCo and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Copa Holdings 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 Copa Holdings will offset losses from the drop in Copa Holdings' long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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