Correlation Between Coca-Cola European and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Coca-Cola European 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 Coca-Cola European and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola European Partners and PepsiCo, you can compare the effects of market volatilities on Coca-Cola European 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 Coca-Cola European with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca-Cola European and PepsiCo.
Diversification Opportunities for Coca-Cola European and PepsiCo
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca-Cola and PepsiCo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Coca-Cola European 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 Coca Cola European Partners 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 Coca-Cola European i.e., Coca-Cola European and PepsiCo go up and down completely randomly.
Pair Corralation between Coca-Cola European and PepsiCo
Assuming the 90 days horizon Coca Cola European Partners is expected to generate 1.39 times more return on investment than PepsiCo. However, Coca-Cola European is 1.39 times more volatile than PepsiCo. It trades about 0.06 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest 4,996 in Coca Cola European Partners on September 26, 2024 and sell it today you would earn a total of 2,334 from holding Coca Cola European Partners or generate 46.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Coca Cola European Partners vs. PepsiCo
Performance |
Timeline |
Coca Cola European |
PepsiCo |
Coca-Cola European and PepsiCo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coca-Cola European and PepsiCo
The main advantage of trading using opposite Coca-Cola European and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola European 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.Coca-Cola European vs. The Coca Cola | Coca-Cola European vs. Monster Beverage Corp | Coca-Cola European vs. Keurig Dr Pepper | Coca-Cola European vs. Coca Cola FEMSA SAB |
PepsiCo vs. PLAYMATES TOYS | PepsiCo vs. ADRIATIC METALS LS 013355 | PepsiCo vs. Media and Games | PepsiCo vs. GREENX METALS LTD |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume |