Correlation Between PepsiCo and FP Newspapers
Can any of the company-specific risk be diversified away by investing in both PepsiCo and FP Newspapers 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 FP Newspapers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and FP Newspapers, you can compare the effects of market volatilities on PepsiCo and FP Newspapers 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 FP Newspapers. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and FP Newspapers.
Diversification Opportunities for PepsiCo and FP Newspapers
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PepsiCo and FPNUF is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and FP Newspapers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FP Newspapers 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 FP Newspapers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FP Newspapers has no effect on the direction of PepsiCo i.e., PepsiCo and FP Newspapers go up and down completely randomly.
Pair Corralation between PepsiCo and FP Newspapers
Considering the 90-day investment horizon PepsiCo is expected to generate 0.15 times more return on investment than FP Newspapers. However, PepsiCo is 6.68 times less risky than FP Newspapers. It trades about -0.1 of its potential returns per unit of risk. FP Newspapers is currently generating about -0.22 per unit of risk. If you would invest 16,334 in PepsiCo on September 14, 2024 and sell it today you would lose (444.00) from holding PepsiCo or give up 2.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. FP Newspapers
Performance |
| Timeline |
| PepsiCo |
| FP Newspapers |
PepsiCo and FP Newspapers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and FP Newspapers
The main advantage of trading using opposite PepsiCo and FP Newspapers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, FP Newspapers 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 FP Newspapers will offset losses from the drop in FP Newspapers' long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| FP Newspapers vs. Ambev SA ADR | FP Newspapers vs. Olympic Steel | FP Newspapers vs. PepsiCo | FP Newspapers vs. Fomento Economico Mexicano |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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