Correlation Between Valeura Energy and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Valeura Energy 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 Valeura Energy and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valeura Energy and PepsiCo, you can compare the effects of market volatilities on Valeura Energy 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 Valeura Energy with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valeura Energy and PepsiCo.
Diversification Opportunities for Valeura Energy and PepsiCo
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Valeura and PepsiCo is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Valeura Energy 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 Valeura Energy 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 Valeura Energy i.e., Valeura Energy and PepsiCo go up and down completely randomly.
Pair Corralation between Valeura Energy and PepsiCo
Assuming the 90 days horizon Valeura Energy is expected to generate 3.87 times more return on investment than PepsiCo. However, Valeura Energy is 3.87 times more volatile than PepsiCo. It trades about 0.03 of its potential returns per unit of risk. PepsiCo is currently generating about -0.02 per unit of risk. If you would invest 397.00 in Valeura Energy on September 1, 2024 and sell it today you would earn a total of 28.00 from holding Valeura Energy or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valeura Energy vs. PepsiCo
Performance |
| Timeline |
| Valeura Energy |
| PepsiCo |
Valeura Energy and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valeura Energy and PepsiCo
The main advantage of trading using opposite Valeura Energy and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeura Energy 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.| Valeura Energy vs. PepsiCo | Valeura Energy vs. Nascent Wine | Valeura Energy vs. NioCorp Developments Ltd | Valeura Energy vs. Perseus Mining Limited |
| PepsiCo vs. Coca Cola Femsa SAB | 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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