Correlation Between PepsiCo and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both PepsiCo and RCI Hospitality 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 RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and RCI Hospitality Holdings, you can compare the effects of market volatilities on PepsiCo and RCI Hospitality 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 RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and RCI Hospitality.
Diversification Opportunities for PepsiCo and RCI Hospitality
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PepsiCo and RCI is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings 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 RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of PepsiCo i.e., PepsiCo and RCI Hospitality go up and down completely randomly.
Pair Corralation between PepsiCo and RCI Hospitality
Considering the 90-day investment horizon PepsiCo is expected to generate 0.45 times more return on investment than RCI Hospitality. However, PepsiCo is 2.2 times less risky than RCI Hospitality. It trades about -0.02 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.02 per unit of risk. If you would invest 16,907 in PepsiCo on September 12, 2024 and sell it today you would lose (1,162) from holding PepsiCo or give up 6.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. RCI Hospitality Holdings
Performance |
| Timeline |
| PepsiCo |
| RCI Hospitality Holdings |
PepsiCo and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and RCI Hospitality
The main advantage of trading using opposite PepsiCo and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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