Correlation Between Integral and PepsiCo

Can any of the company-specific risk be diversified away by investing in both Integral 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 Integral and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Integral Ad Science and PepsiCo, you can compare the effects of market volatilities on Integral 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 Integral with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and PepsiCo.

Diversification Opportunities for Integral and PepsiCo

-0.1

Correlation Coefficient

Integral  PepsiCo

Good diversification

The 3 months correlation between Integral and PepsiCo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Integral 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 Integral Ad Science 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 Integral i.e., Integral and PepsiCo go up and down completely randomly.

Pair Corralation between Integral and PepsiCo

Considering the 90-day investment horizon Integral Ad Science is expected to generate 1.8 times more return on investment than PepsiCo. However, Integral is 1.8 times more volatile than PepsiCo. It trades about 0.01 of its potential returns per unit of risk. PepsiCo is currently generating about -0.02 per unit of risk. If you would invest  1,044  in Integral Ad Science on September 19, 2024 and sell it today you would earn a total of  1.00  from holding Integral Ad Science or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Integral Ad Science  vs.  PepsiCo

Integral Ad Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Ad Science has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integral is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PepsiCo

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 latest unsteady performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Integral and PepsiCo

The main advantage of trading using opposite Integral and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral 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 Integral Ad Science 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.