Correlation Between Compass Group and Givaudan
Can any of the company-specific risk be diversified away by investing in both Compass Group and Givaudan 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 Compass Group and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and Givaudan SA, you can compare the effects of market volatilities on Compass Group and Givaudan 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 Compass Group with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Givaudan.
Diversification Opportunities for Compass Group and Givaudan
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compass and Givaudan is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Compass Group 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 Compass Group PLC are associated (or correlated) with Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Compass Group i.e., Compass Group and Givaudan go up and down completely randomly.
Pair Corralation between Compass Group and Givaudan
Assuming the 90 days trading horizon Compass Group PLC is expected to generate 1.18 times more return on investment than Givaudan. However, Compass Group is 1.18 times more volatile than Givaudan SA. It trades about 0.15 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.03 per unit of risk. If you would invest 260,631 in Compass Group PLC on October 20, 2024 and sell it today you would earn a total of 6,869 from holding Compass Group PLC or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Group PLC vs. Givaudan SA
Performance |
| Timeline |
| Compass Group PLC |
| Givaudan SA |
Compass Group and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Givaudan
The main advantage of trading using opposite Compass Group and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Compass Group vs. MoneysupermarketCom Group PLC | Compass Group vs. Seraphim Space Investment | Compass Group vs. Beeks Trading | Compass Group vs. Supermarket Income REIT |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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