Correlation Between Primo Brands and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Primo Brands and PepsiCo 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 Primo Brands and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primo Brands and PepsiCo, you can compare the effects of market volatilities on Primo Brands and PepsiCo 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 Primo Brands with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primo Brands and PepsiCo.
Diversification Opportunities for Primo Brands and PepsiCo
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Primo and PepsiCo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Primo Brands 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 Primo Brands are associated (or correlated) with PepsiCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepsiCo has no effect on the direction of Primo Brands i.e., Primo Brands and PepsiCo go up and down completely randomly.
Pair Corralation between Primo Brands and PepsiCo
Given the investment horizon of 90 days Primo Brands is expected to generate 2.22 times more return on investment than PepsiCo. However, Primo Brands is 2.22 times more volatile than PepsiCo. It trades about 0.09 of its potential returns per unit of risk. PepsiCo is currently generating about -0.32 per unit of risk. If you would invest 2,707 in Primo Brands on August 23, 2024 and sell it today you would earn a total of 125.00 from holding Primo Brands or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primo Brands vs. PepsiCo
Performance |
| Timeline |
| Primo Brands |
| PepsiCo |
Primo Brands and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primo Brands and PepsiCo
The main advantage of trading using opposite Primo Brands and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Brands position performs unexpectedly, PepsiCo 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 PepsiCo will offset losses from the drop in PepsiCo's long position.| Primo Brands vs. The Coca Cola | Primo Brands vs. National Beverage Corp | Primo Brands vs. Keurig Dr Pepper | Primo Brands vs. Coca Cola Femsa SAB |
| PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Coca Cola Femsa SAB | PepsiCo vs. Vita Coco |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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