Correlation Between PepsiCo and Rogers
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Rogers 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 Rogers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Rogers, you can compare the effects of market volatilities on PepsiCo and Rogers 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 Rogers. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Rogers.
Diversification Opportunities for PepsiCo and Rogers
Very good diversification
The 3 months correlation between PepsiCo and Rogers is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Rogers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers 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 Rogers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers has no effect on the direction of PepsiCo i.e., PepsiCo and Rogers go up and down completely randomly.
Pair Corralation between PepsiCo and Rogers
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Rogers. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.62 times less risky than Rogers. The stock trades about -0.13 of its potential returns per unit of risk. The Rogers is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 10,655 in Rogers on September 12, 2024 and sell it today you would lose (25.00) from holding Rogers or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Rogers
Performance |
| Timeline |
| PepsiCo |
| Rogers |
PepsiCo and Rogers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Rogers
The main advantage of trading using opposite PepsiCo and Rogers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Rogers 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 Rogers will offset losses from the drop in Rogers' long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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