Correlation Between United Internet and PepsiCo
Can any of the company-specific risk be diversified away by investing in both United Internet 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 United Internet and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and PepsiCo, you can compare the effects of market volatilities on United Internet 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 United Internet with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and PepsiCo.
Diversification Opportunities for United Internet and PepsiCo
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and PepsiCo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and United Internet 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 United Internet AG 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 United Internet i.e., United Internet and PepsiCo go up and down completely randomly.
Pair Corralation between United Internet and PepsiCo
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the PepsiCo. In addition to that, United Internet is 2.61 times more volatile than PepsiCo. It trades about -0.2 of its total potential returns per unit of risk. PepsiCo is currently generating about -0.17 per unit of volatility. If you would invest 15,601 in PepsiCo on September 27, 2024 and sell it today you would lose (1,133) from holding PepsiCo or give up 7.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. PepsiCo
Performance |
| Timeline |
| United Internet AG |
| PepsiCo |
United Internet and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and PepsiCo
The main advantage of trading using opposite United Internet and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet 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.| United Internet vs. Strategic Investments AS | United Internet vs. UNIVERSAL MUSIC GROUP | United Internet vs. Ares Management Corp | United Internet vs. Gladstone Investment |
| PepsiCo vs. Hemisphere Energy Corp | PepsiCo vs. United Internet AG | PepsiCo vs. Iridium Communications | PepsiCo vs. Gamma Communications plc |
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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