Correlation Between Socit BIC and Sodexo SA
Can any of the company-specific risk be diversified away by investing in both Socit BIC and Sodexo SA 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 Socit BIC and Sodexo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Socit BIC SA and Sodexo SA, you can compare the effects of market volatilities on Socit BIC and Sodexo SA 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 Socit BIC with a short position of Sodexo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Socit BIC and Sodexo SA.
Diversification Opportunities for Socit BIC and Sodexo SA
Poor diversification
The 3 months correlation between Socit and Sodexo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Socit BIC SA and Sodexo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo SA and Socit BIC 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 Socit BIC SA are associated (or correlated) with Sodexo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodexo SA has no effect on the direction of Socit BIC i.e., Socit BIC and Sodexo SA go up and down completely randomly.
Pair Corralation between Socit BIC and Sodexo SA
Assuming the 90 days horizon Socit BIC SA is expected to under-perform the Sodexo SA. But the stock apears to be less risky and, when comparing its historical volatility, Socit BIC SA is 1.39 times less risky than Sodexo SA. The stock trades about -0.54 of its potential returns per unit of risk. The Sodexo SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 8,145 in Sodexo SA on August 28, 2024 and sell it today you would lose (50.00) from holding Sodexo SA or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Socit BIC SA vs. Sodexo SA
Performance |
| Timeline |
| Socit BIC SA |
| Sodexo SA |
Socit BIC and Sodexo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Socit BIC and Sodexo SA
The main advantage of trading using opposite Socit BIC and Sodexo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Socit BIC position performs unexpectedly, Sodexo SA 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 Sodexo SA will offset losses from the drop in Sodexo SA's long position.| Socit BIC vs. Imerys SA | Socit BIC vs. Casino Guichard Perrachon | Socit BIC vs. SEB SA | Socit BIC vs. Mtropole Tlvision SA |
| Sodexo SA vs. Accor S A | Sodexo SA vs. Publicis Groupe SA | Sodexo SA vs. Legrand SA | Sodexo SA vs. Pernod Ricard SA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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