Correlation Between Western Asset and PepsiCo

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Imf and PepsiCo, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and PepsiCo.

Diversification Opportunities for Western Asset and PepsiCo

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Western and PepsiCo is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset IMF and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Western Asset 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 Western Asset Imf 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 Western Asset i.e., Western Asset and PepsiCo go up and down completely randomly.

Pair Corralation between Western Asset and PepsiCo

Considering the 90-day investment horizon Western Asset is expected to generate 2.01 times less return on investment than PepsiCo. But when comparing it to its historical volatility, Western Asset Imf is 1.76 times less risky than PepsiCo. It trades about 0.01 of its potential returns per unit of risk. PepsiCo is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  16,449  in PepsiCo on December 30, 2023 and sell it today you would earn a total of  1,052  from holding PepsiCo or generate 6.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Western Asset IMF  vs.  PepsiCo

 Performance 
       Timeline  
Western Asset Imf 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Imf are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental drivers, Western Asset is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
PepsiCo 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PepsiCo are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, PepsiCo is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Western Asset and PepsiCo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Western Asset and PepsiCo

The main advantage of trading using opposite Western Asset and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.
The idea behind Western Asset Imf and PepsiCo 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

Other Complementary Tools

Share Portfolio
Track or share privately all of your investments from the convenience of any device
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Money Managers
Screen money managers from public funds and ETFs managed around the world
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Equity Valuation
Check real value of public entities based on technical and fundamental data
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format