Correlation Between Uranium Energy and PepsiCo

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

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

Diversification Opportunities for Uranium Energy and PepsiCo

-0.66

Correlation Coefficient

Uranium Energy  PepsiCo

Excellent diversification

The 3 months correlation between Uranium and PepsiCo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Uranium Energy Corp and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Uranium 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 Uranium Energy Corp 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 Uranium Energy i.e., Uranium Energy and PepsiCo go up and down completely randomly.

Pair Corralation between Uranium Energy and PepsiCo

Considering the 90-day investment horizon Uranium Energy Corp is expected to generate 4.18 times more return on investment than PepsiCo. However, Uranium Energy is 4.18 times more volatile than PepsiCo. It trades about 0.21 of its potential returns per unit of risk. PepsiCo is currently generating about -0.18 per unit of risk. 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

Uranium Energy Corp  vs.  PepsiCo

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.

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.

Pair Trading with Uranium Energy and PepsiCo

The main advantage of trading using opposite Uranium Energy and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uranium 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.

The idea behind Uranium Energy Corp and PepsiCo 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .