Correlation Between PepsiCo and Boston Beer
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Boston Beer 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 Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Boston Beer, you can compare the effects of market volatilities on PepsiCo and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Boston Beer.
Diversification Opportunities for PepsiCo and Boston Beer
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PepsiCo and Boston is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of PepsiCo i.e., PepsiCo and Boston Beer go up and down completely randomly.
Pair Corralation between PepsiCo and Boston Beer
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Boston Beer. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.2 times less risky than Boston Beer. The stock trades about -0.16 of its potential returns per unit of risk. The Boston Beer is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 30,433 in Boston Beer on August 29, 2024 and sell it today you would earn a total of 935.00 from holding Boston Beer or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Boston Beer
Performance |
| Timeline |
| PepsiCo |
| Boston Beer |
PepsiCo and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Boston Beer
The main advantage of trading using opposite PepsiCo and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Carlsberg AS | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Molson Coors Brewing |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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