Correlation Between PepsiCo and Playtika Holding

Can any of the company-specific risk be diversified away by investing in both PepsiCo and Playtika Holding 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 PepsiCo and Playtika Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PepsiCo and Playtika Holding Corp, you can compare the effects of market volatilities on PepsiCo and Playtika Holding 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 PepsiCo with a short position of Playtika Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Playtika Holding.

Diversification Opportunities for PepsiCo and Playtika Holding

-0.16

Correlation Coefficient

PepsiCo  Playtika Holding

Good diversification

The 3 months correlation between PepsiCo and Playtika is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp and PepsiCo 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 PepsiCo are associated (or correlated) with Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of PepsiCo i.e., PepsiCo and Playtika Holding go up and down completely randomly.

Pair Corralation between PepsiCo and Playtika Holding

Considering the 90-day investment horizon PepsiCo is expected to generate 0.56 times more return on investment than Playtika Holding. However, PepsiCo is 1.78 times less risky than Playtika Holding. It trades about -0.15 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.13 per unit of risk. If you would invest  16,856  in PepsiCo on September 27, 2024 and sell it today you would lose (1,575) from holding PepsiCo or give up 9.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PepsiCo  vs.  Playtika Holding Corp

PepsiCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PepsiCo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Playtika Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtika Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PepsiCo and Playtika Holding

The main advantage of trading using opposite PepsiCo and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Playtika Holding 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 Playtika Holding will offset losses from the drop in Playtika Holding's long position.

The idea behind PepsiCo and Playtika Holding Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..