Correlation Between PepsiCo and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both PepsiCo and PennantPark Investment 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 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and PennantPark Investment, you can compare the effects of market volatilities on PepsiCo and PennantPark Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and PennantPark Investment.
Diversification Opportunities for PepsiCo and PennantPark Investment
-0.45 | Correlation Coefficient |
Very good 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 Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of PepsiCo i.e., PepsiCo and PennantPark Investment go up and down completely randomly.
Pair Corralation between PepsiCo and PennantPark Investment
Considering the 90-day investment horizon PepsiCo is expected to under-perform the PennantPark Investment. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.23 times less risky than PennantPark Investment. The stock trades about -0.06 of its potential returns per unit of risk. The PennantPark Investment is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 685.00 in PennantPark Investment on September 1, 2024 and sell it today you would lose (8.00) from holding PennantPark Investment or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. PennantPark Investment
Performance |
| Timeline |
| PepsiCo |
| PennantPark Investment |
PepsiCo and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and PennantPark Investment
The main advantage of trading using opposite PepsiCo and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, PennantPark Investment 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 Investment will offset losses from the drop in PennantPark Investment's long position.| PepsiCo vs. Coca Cola Femsa SAB | PepsiCo vs. National Beverage Corp | PepsiCo vs. Embotelladora Andina SA |
| PennantPark Investment vs. Visa Class A | PennantPark Investment vs. Diamond Hill Investment | PennantPark Investment vs. Distoken Acquisition | PennantPark Investment vs. Associated Capital Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |