Correlation Between PepsiCo and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Emerging Markets 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 Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Emerging Markets Fund, you can compare the effects of market volatilities on PepsiCo and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Emerging Markets.
Diversification Opportunities for PepsiCo and Emerging Markets
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between PepsiCo and Emerging is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of PepsiCo i.e., PepsiCo and Emerging Markets go up and down completely randomly.
Pair Corralation between PepsiCo and Emerging Markets
Considering the 90-day investment horizon PepsiCo is expected to generate 0.89 times more return on investment than Emerging Markets. However, PepsiCo is 1.12 times less risky than Emerging Markets. It trades about 0.02 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about -0.12 per unit of risk. If you would invest 17,186 in PepsiCo on January 20, 2024 and sell it today you would earn a total of 41.00 from holding PepsiCo or generate 0.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
PepsiCo vs. Emerging Markets Fund
Performance |
Timeline |
PepsiCo |
Emerging Markets |
PepsiCo and Emerging Markets Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PepsiCo and Emerging Markets
The main advantage of trading using opposite PepsiCo and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
Emerging Markets vs. Unconstrained Emerging Markets | Emerging Markets vs. Unconstrained Emerging Markets | Emerging Markets vs. Unconstrained Emerging Markets | Emerging Markets vs. Vaneck Emerging Markets |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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