diversifiable risk of combining PepsiCo and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Fevertree Drinks Plc, you can compare the effects of market volatilities on PepsiCo and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Fevertree Drinks.
Diversification Opportunities for PepsiCo and Fevertree Drinks
Pair Corralation between PepsiCo and Fevertree Drinks
Considering the 90-day investment horizon PepsiCo is expected to generate 0.32 times more return on investment than Fevertree Drinks. However, PepsiCo is 3.14 times less risky than Fevertree Drinks. It trades about 0.01 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.01 per unit of risk. If you would invest 16,575 in PepsiCo on November 24, 2023 and sell it today you would earn a total of 308.00 from holding PepsiCo or generate 1.86% return on investment over 90 days.
PepsiCo vs. Fevertree Drinks Plc
PepsiCo and Fevertree Drinks Volatility Contrast
Pair Trading with PepsiCo and Fevertree DrinksThe main advantage of trading using opposite PepsiCo and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position. The idea behind PepsiCo and Fevertree Drinks Plc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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