Correlation Between V and PepsiCo
Can any of the company-specific risk be diversified away by investing in both V 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 V and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between V Group and PepsiCo, you can compare the effects of market volatilities on V 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 V with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of V and PepsiCo.
Diversification Opportunities for V and PepsiCo
Pay attention - limited upside
The 3 months correlation between V and PepsiCo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding V Group and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and V 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 V Group 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 V i.e., V and PepsiCo go up and down completely randomly.
Pair Corralation between V and PepsiCo
Given the investment horizon of 90 days V Group is expected to under-perform the PepsiCo. In addition to that, V is 5.12 times more volatile than PepsiCo. It trades about -0.01 of its total potential returns per unit of risk. PepsiCo is currently generating about 0.0 per unit of volatility. If you would invest 16,363 in PepsiCo on September 2, 2024 and sell it today you would lose (18.00) from holding PepsiCo or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
V Group vs. PepsiCo
Performance |
| Timeline |
| V Group |
| PepsiCo |
V and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with V and PepsiCo
The main advantage of trading using opposite V and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V 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.The idea behind V Group and PepsiCo pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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