Correlation Between Postal Realty and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Postal Realty 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 Postal Realty and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Realty Trust and PepsiCo, you can compare the effects of market volatilities on Postal Realty 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 Postal Realty with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Realty and PepsiCo.
Diversification Opportunities for Postal Realty and PepsiCo
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Postal and PepsiCo is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Postal Realty Trust and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Postal Realty 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 Postal Realty Trust 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 Postal Realty i.e., Postal Realty and PepsiCo go up and down completely randomly.
Pair Corralation between Postal Realty and PepsiCo
Given the investment horizon of 90 days Postal Realty Trust is expected to generate 1.07 times more return on investment than PepsiCo. However, Postal Realty is 1.07 times more volatile than PepsiCo. It trades about -0.03 of its potential returns per unit of risk. PepsiCo is currently generating about -0.06 per unit of risk. If you would invest 1,431 in Postal Realty Trust on September 1, 2024 and sell it today you would lose (14.00) from holding Postal Realty Trust or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Realty Trust vs. PepsiCo
Performance |
| Timeline |
| Postal Realty Trust |
| PepsiCo |
Postal Realty and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Realty and PepsiCo
The main advantage of trading using opposite Postal Realty and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Realty 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.| Postal Realty vs. Douglas Emmett | Postal Realty vs. Alexandria Real Estate | Postal Realty vs. Vornado Realty Trust | Postal Realty vs. Highwoods Properties |
| PepsiCo vs. Coca Cola Femsa SAB | PepsiCo vs. Embotelladora Andina SA | PepsiCo vs. National Beverage Corp | PepsiCo vs. Embotelladora Andina SA |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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