Correlation Between PepsiCo and Hafnia
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Hafnia 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 Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Hafnia Limited, you can compare the effects of market volatilities on PepsiCo and Hafnia 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 Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Hafnia.
Diversification Opportunities for PepsiCo and Hafnia
Very good diversification
The 3 months correlation between PepsiCo and Hafnia is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of PepsiCo i.e., PepsiCo and Hafnia go up and down completely randomly.
Pair Corralation between PepsiCo and Hafnia
Considering the 90-day investment horizon PepsiCo is expected to generate 0.46 times more return on investment than Hafnia. However, PepsiCo is 2.16 times less risky than Hafnia. It trades about 0.03 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.06 per unit of risk. If you would invest 14,965 in PepsiCo on November 4, 2024 and sell it today you would earn a total of 104.00 from holding PepsiCo or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Hafnia Limited
Performance |
| Timeline |
| PepsiCo |
| Hafnia Limited |
PepsiCo and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Hafnia
The main advantage of trading using opposite PepsiCo and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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