Correlation Between AppHarvest and PepsiCo
Can any of the company-specific risk be diversified away by investing in both AppHarvest 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 AppHarvest and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AppHarvest and PepsiCo, you can compare the effects of market volatilities on AppHarvest 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 AppHarvest with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of AppHarvest and PepsiCo.
Diversification Opportunities for AppHarvest and PepsiCo
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between AppHarvest and PepsiCo is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding AppHarvest and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and AppHarvest 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 AppHarvest 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 AppHarvest i.e., AppHarvest and PepsiCo go up and down completely randomly.
Pair Corralation between AppHarvest and PepsiCo
Given the investment horizon of 90 days AppHarvest is expected to under-perform the PepsiCo. In addition to that, AppHarvest is 9.78 times more volatile than PepsiCo. It trades about -0.1 of its total potential returns per unit of risk. PepsiCo is currently generating about 0.02 per unit of volatility. If you would invest 15,986 in PepsiCo on January 20, 2024 and sell it today you would earn a total of 1,241 from holding PepsiCo or generate 7.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 71.37% |
Values | Daily Returns |
AppHarvest vs. PepsiCo
Performance |
Timeline |
AppHarvest |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PepsiCo |
AppHarvest and PepsiCo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AppHarvest and PepsiCo
The main advantage of trading using opposite AppHarvest and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AppHarvest 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.AppHarvest vs. Porch Group | AppHarvest vs. DermTech | AppHarvest vs. Hydrofarm Holdings GroupInc | AppHarvest vs. Danimer Scientific |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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