Correlation Between PepsiCo and Postal Realty
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Postal Realty 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 Postal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Postal Realty Trust, you can compare the effects of market volatilities on PepsiCo and Postal Realty 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 Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Postal Realty.
Diversification Opportunities for PepsiCo and Postal Realty
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PepsiCo and Postal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust 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 Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of PepsiCo i.e., PepsiCo and Postal Realty go up and down completely randomly.
Pair Corralation between PepsiCo and Postal Realty
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Postal Realty. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.08 times less risky than Postal Realty. The stock trades about -0.17 of its potential returns per unit of risk. The Postal Realty Trust is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,439 in Postal Realty Trust on August 29, 2024 and sell it today you would lose (34.00) from holding Postal Realty Trust or give up 2.36% 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. Postal Realty Trust
Performance |
| Timeline |
| PepsiCo |
| Postal Realty Trust |
PepsiCo and Postal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Postal Realty
The main advantage of trading using opposite PepsiCo and Postal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Postal Realty 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 Postal Realty will offset losses from the drop in Postal Realty's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Postal Realty vs. Office Properties Income | Postal Realty vs. SL Green Realty | Postal Realty vs. Cousins Properties Incorporated | Postal Realty vs. Highwoods Properties |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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