Correlation Between Westrock Coffee and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee 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 Westrock Coffee and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and PepsiCo, you can compare the effects of market volatilities on Westrock Coffee 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 Westrock Coffee with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and PepsiCo.
Diversification Opportunities for Westrock Coffee and PepsiCo
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Westrock and PepsiCo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee i.e., Westrock Coffee and PepsiCo go up and down completely randomly.
Pair Corralation between Westrock Coffee and PepsiCo
Given the investment horizon of 90 days Westrock Coffee is expected to generate 3.06 times more return on investment than PepsiCo. However, Westrock Coffee is 3.06 times more volatile than PepsiCo. It trades about 0.27 of its potential returns per unit of risk. PepsiCo is currently generating about -0.06 per unit of risk. If you would invest 664.00 in Westrock Coffee on September 1, 2024 and sell it today you would earn a total of 139.00 from holding Westrock Coffee or generate 20.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westrock Coffee vs. PepsiCo
Performance |
| Timeline |
| Westrock Coffee |
| PepsiCo |
Westrock Coffee and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and PepsiCo
The main advantage of trading using opposite Westrock Coffee and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee 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.| Westrock Coffee vs. Campbell Soup | Westrock Coffee vs. ConAgra Foods | Westrock Coffee vs. Hormel Foods | Westrock Coffee vs. Kellanova |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |