Correlation Between PepsiCo and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both PepsiCo and PennantPark Floating 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 PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and PennantPark Floating Rate, you can compare the effects of market volatilities on PepsiCo and PennantPark Floating 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 PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and PennantPark Floating.
Diversification Opportunities for PepsiCo and PennantPark Floating
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PepsiCo and PennantPark is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of PepsiCo i.e., PepsiCo and PennantPark Floating go up and down completely randomly.
Pair Corralation between PepsiCo and PennantPark Floating
Considering the 90-day investment horizon PepsiCo is expected to under-perform the PennantPark Floating. In addition to that, PepsiCo is 2.0 times more volatile than PennantPark Floating Rate. It trades about -0.07 of its total potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.2 per unit of volatility. If you would invest 1,090 in PennantPark Floating Rate on September 3, 2024 and sell it today you would earn a total of 26.00 from holding PennantPark Floating Rate or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. PennantPark Floating Rate
Performance |
| Timeline |
| PepsiCo |
| PennantPark Floating Rate |
PepsiCo and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and PennantPark Floating
The main advantage of trading using opposite PepsiCo and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| PennantPark Floating vs. Federated Premier Municipal | PennantPark Floating vs. Blackrock Muniyield | PennantPark Floating vs. Federated Investors B | PennantPark Floating vs. SEI Investments |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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