Correlation Between Crimson Wine and PepsiCo

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

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

Diversification Opportunities for Crimson Wine and PepsiCo

0.48

Correlation Coefficient

Crimson Wine  PepsiCo

Very weak diversification

The 3 months correlation between Crimson and PepsiCo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Crimson Wine 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 Crimson Wine 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 Crimson Wine i.e., Crimson Wine and PepsiCo go up and down completely randomly.

Pair Corralation between Crimson Wine and PepsiCo

Given the investment horizon of 90 days Crimson Wine is expected to generate 3.45 times less return on investment than PepsiCo. In addition to that, Crimson Wine is 1.12 times more volatile than PepsiCo. It trades about 0.02 of its total potential returns per unit of risk. PepsiCo is currently generating about 0.09 per unit of volatility. If you would invest  12,932  in PepsiCo on May 6, 2025 and sell it today you would earn a total of  996.00  from holding PepsiCo or generate 7.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Crimson Wine  vs.  PepsiCo

Crimson Wine

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crimson Wine are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Crimson Wine is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

PepsiCo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PepsiCo are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, PepsiCo may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Crimson Wine and PepsiCo

The main advantage of trading using opposite Crimson Wine and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crimson Wine 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 Crimson Wine 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.