Correlation Between ENN Energy and PepsiCo
Can any of the company-specific risk be diversified away by investing in both ENN 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 ENN Energy and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENN Energy Holdings and PepsiCo, you can compare the effects of market volatilities on ENN 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 ENN Energy with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and PepsiCo.
Diversification Opportunities for ENN Energy and PepsiCo
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ENN and PepsiCo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and ENN 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 ENN Energy Holdings 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 ENN Energy i.e., ENN Energy and PepsiCo go up and down completely randomly.
Pair Corralation between ENN Energy and PepsiCo
Assuming the 90 days trading horizon ENN Energy Holdings is expected to generate 3.46 times more return on investment than PepsiCo. However, ENN Energy is 3.46 times more volatile than PepsiCo. It trades about 0.02 of its potential returns per unit of risk. PepsiCo is currently generating about 0.0 per unit of risk. If you would invest 632.00 in ENN Energy Holdings on September 28, 2024 and sell it today you would earn a total of 43.00 from holding ENN Energy Holdings or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENN Energy Holdings vs. PepsiCo
Performance |
| Timeline |
| ENN Energy Holdings |
| PepsiCo |
ENN Energy and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENN Energy and PepsiCo
The main advantage of trading using opposite ENN Energy and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENN 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.| ENN Energy vs. Snam SpA | ENN Energy vs. Atmos Energy | ENN Energy vs. China Resources Gas | ENN Energy vs. Tokyo Gas CoLtd |
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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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