Correlation Between Vestis and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Vestis 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 Vestis and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestis and PepsiCo, you can compare the effects of market volatilities on Vestis 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 Vestis with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestis and PepsiCo.
Diversification Opportunities for Vestis and PepsiCo
Average diversification
The 3 months correlation between Vestis and PepsiCo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vestis and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Vestis 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 Vestis 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 Vestis i.e., Vestis and PepsiCo go up and down completely randomly.
Pair Corralation between Vestis and PepsiCo
Given the investment horizon of 90 days Vestis is expected to generate 3.56 times more return on investment than PepsiCo. However, Vestis is 3.56 times more volatile than PepsiCo. It trades about 0.22 of its potential returns per unit of risk. PepsiCo is currently generating about -0.06 per unit of risk. If you would invest 1,352 in Vestis on September 1, 2024 and sell it today you would earn a total of 256.00 from holding Vestis or generate 18.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestis vs. PepsiCo
Performance |
| Timeline |
| Vestis |
| PepsiCo |
Vestis and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestis and PepsiCo
The main advantage of trading using opposite Vestis and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestis 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.| Vestis vs. Oatly Group AB | Vestis vs. Nascent Wine | Vestis vs. Willamette Valley Vineyards | Vestis vs. LithiumBank Resources Corp |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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