Correlation Between PepsiCo and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Macquarie Group 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 Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Macquarie Group Ltd, you can compare the effects of market volatilities on PepsiCo and Macquarie Group 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 Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Macquarie Group.
Diversification Opportunities for PepsiCo and Macquarie Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between PepsiCo and Macquarie is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of PepsiCo i.e., PepsiCo and Macquarie Group go up and down completely randomly.
Pair Corralation between PepsiCo and Macquarie Group
Considering the 90-day investment horizon PepsiCo is expected to generate 0.84 times more return on investment than Macquarie Group. However, PepsiCo is 1.19 times less risky than Macquarie Group. It trades about 0.08 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about -0.02 per unit of risk. If you would invest 16,786 in PepsiCo on January 26, 2024 and sell it today you would earn a total of 955.00 from holding PepsiCo or generate 5.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
PepsiCo vs. Macquarie Group Ltd
Performance |
Timeline |
PepsiCo |
Macquarie Group |
PepsiCo and Macquarie Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PepsiCo and Macquarie Group
The main advantage of trading using opposite PepsiCo and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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