Correlation Between PepsiCo and Merit Medical
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Merit Medical Systems, you can compare the effects of market volatilities on PepsiCo and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Merit Medical.
Diversification Opportunities for PepsiCo and Merit Medical
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PepsiCo and Merit is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of PepsiCo i.e., PepsiCo and Merit Medical go up and down completely randomly.
Pair Corralation between PepsiCo and Merit Medical
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Merit Medical. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.64 times less risky than Merit Medical. The stock trades about -0.03 of its potential returns per unit of risk. The Merit Medical Systems is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,484 in Merit Medical Systems on August 30, 2024 and sell it today you would earn a total of 1,882 from holding Merit Medical Systems or generate 22.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Merit Medical Systems
Performance |
| Timeline |
| PepsiCo |
| Merit Medical Systems |
PepsiCo and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Merit Medical
The main advantage of trading using opposite PepsiCo and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Merit Medical vs. Femasys | Merit Medical vs. Sharps Technology Warrant | Merit Medical vs. GlucoTrack | Merit Medical vs. Walt Disney |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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