Correlation Between PepsiCo and Molson Coors
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Molson Coors 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 Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Molson Coors Brewing, you can compare the effects of market volatilities on PepsiCo and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Molson Coors.
Diversification Opportunities for PepsiCo and Molson Coors
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PepsiCo and Molson is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of PepsiCo i.e., PepsiCo and Molson Coors go up and down completely randomly.
Pair Corralation between PepsiCo and Molson Coors
Considering the 90-day investment horizon PepsiCo is expected to generate 0.56 times more return on investment than Molson Coors. However, PepsiCo is 1.78 times less risky than Molson Coors. It trades about -0.22 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about -0.18 per unit of risk. If you would invest 17,126 in PepsiCo on January 17, 2024 and sell it today you would lose (431.00) from holding PepsiCo or give up 2.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
PepsiCo vs. Molson Coors Brewing
Performance |
| Timeline |
| PepsiCo |
| Molson Coors Brewing |
PepsiCo and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Molson Coors
The main advantage of trading using opposite PepsiCo and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Molson Coors vs. Fomento Economico Mexicano | Molson Coors vs. Carlsberg AS | Molson Coors vs. Molson Coors Beverage | Molson Coors vs. Heineken NV |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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