Correlation Between PepsiCo and Aquagold International

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Can any of the company-specific risk be diversified away by investing in both PepsiCo and Aquagold International 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 Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Aquagold International, you can compare the effects of market volatilities on PepsiCo and Aquagold International 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 Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Aquagold International.

Diversification Opportunities for PepsiCo and Aquagold International

  Correlation Coefficient

Good diversification

The 3 months correlation between PepsiCo and Aquagold is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of PepsiCo i.e., PepsiCo and Aquagold International go up and down completely randomly.

Pair Corralation between PepsiCo and Aquagold International

Considering the 90-day investment horizon PepsiCo is expected to under-perform the Aquagold International. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 3.68 times less risky than Aquagold International. The stock trades about -0.06 of its potential returns per unit of risk. The Aquagold International is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Aquagold International on December 1, 2023 and sell it today you would earn a total of  0.10  from holding Aquagold International or generate 20.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

PepsiCo  vs.  Aquagold International


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 relatively invariable technical and fundamental indicators, PepsiCo is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.
Aquagold International 

Risk-Adjusted Performance

0 of 100

Very Weak
Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

PepsiCo and Aquagold International Volatility Contrast

   Predicted Return Density   

Pair Trading with PepsiCo and Aquagold International

The main advantage of trading using opposite PepsiCo and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Aquagold International 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 Aquagold International will offset losses from the drop in Aquagold International's long position.
The idea behind PepsiCo and Aquagold International 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.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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