Correlation Between PepsiCo and Uranium Energy

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

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

Diversification Opportunities for PepsiCo and Uranium Energy

-0.66

Correlation Coefficient

PepsiCo  Uranium Energy

Excellent diversification

The 3 months correlation between PepsiCo and Uranium is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Uranium Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uranium Energy 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 Uranium Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uranium Energy Corp has no effect on the direction of PepsiCo i.e., PepsiCo and Uranium Energy go up and down completely randomly.

Pair Corralation between PepsiCo and Uranium Energy

Considering the 90-day investment horizon PepsiCo is expected to under-perform the Uranium Energy. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 4.18 times less risky than Uranium Energy. The stock trades about -0.18 of its potential returns per unit of risk. The Uranium Energy Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  525.00  in Uranium Energy Corp on September 12, 2024 and sell it today you would earn a total of  317.00  from holding Uranium Energy Corp or generate 60.38% return on investment over 90 days.

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

PepsiCo  vs.  Uranium Energy 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 inconsistent 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.

Uranium Energy Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Uranium Energy Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Uranium Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PepsiCo and Uranium Energy

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

The idea behind PepsiCo and Uranium Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.