Correlation Between Media and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Media 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 Media and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and PepsiCo, you can compare the effects of market volatilities on Media 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 Media with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and PepsiCo.
Diversification Opportunities for Media and PepsiCo
Very good diversification
The 3 months correlation between Media and PepsiCo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Media 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 Media and Games 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 Media i.e., Media and PepsiCo go up and down completely randomly.
Pair Corralation between Media and PepsiCo
Assuming the 90 days trading horizon Media and Games is expected to under-perform the PepsiCo. In addition to that, Media is 3.28 times more volatile than PepsiCo. It trades about -0.04 of its total potential returns per unit of risk. PepsiCo is currently generating about -0.06 per unit of volatility. If you would invest 15,124 in PepsiCo on September 27, 2024 and sell it today you would lose (662.00) from holding PepsiCo or give up 4.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Media and Games vs. PepsiCo
Performance |
Timeline |
Media and Games |
PepsiCo |
Media and PepsiCo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Media and PepsiCo
The main advantage of trading using opposite Media and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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.Media vs. DISTRICT METALS | Media vs. Western Copper and | Media vs. Jacquet Metal Service | Media vs. Zijin Mining Group |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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