Correlation Between ScanSource and PepsiCo

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

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

Diversification Opportunities for ScanSource and PepsiCo

-0.12

Correlation Coefficient

ScanSource  PepsiCo

Good diversification

The 3 months correlation between ScanSource and PepsiCo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and PepsiCo go up and down completely randomly.

Pair Corralation between ScanSource and PepsiCo

Given the investment horizon of 90 days ScanSource is expected to generate 4.6 times less return on investment than PepsiCo. In addition to that, ScanSource is 1.07 times more volatile than PepsiCo. It trades about 0.02 of its total potential returns per unit of risk. PepsiCo is currently generating about 0.12 per unit of volatility. If you would invest  13,025  in PepsiCo on May 12, 2025 and sell it today you would earn a total of  1,496  from holding PepsiCo or generate 11.49% return on investment over 90 days.

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

ScanSource  vs.  PepsiCo

ScanSource

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PepsiCo

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in PepsiCo are ranked lower than 9 (%) 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 ScanSource and PepsiCo

The main advantage of trading using opposite ScanSource and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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 ScanSource 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.