Correlation Between Edenred SA and Roctool
Can any of the company-specific risk be diversified away by investing in both Edenred SA and Roctool 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 Edenred SA and Roctool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edenred SA and Roctool, you can compare the effects of market volatilities on Edenred SA and Roctool 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 Edenred SA with a short position of Roctool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edenred SA and Roctool.
Diversification Opportunities for Edenred SA and Roctool
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Edenred and Roctool is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Edenred SA and Roctool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roctool and Edenred SA 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 Edenred SA are associated (or correlated) with Roctool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roctool has no effect on the direction of Edenred SA i.e., Edenred SA and Roctool go up and down completely randomly.
Pair Corralation between Edenred SA and Roctool
Assuming the 90 days trading horizon Edenred SA is expected to generate 0.4 times more return on investment than Roctool. However, Edenred SA is 2.51 times less risky than Roctool. It trades about -0.07 of its potential returns per unit of risk. Roctool is currently generating about -0.07 per unit of risk. If you would invest 5,141 in Edenred SA on September 2, 2024 and sell it today you would lose (2,011) from holding Edenred SA or give up 39.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edenred SA vs. Roctool
Performance |
| Timeline |
| Edenred SA |
| Roctool |
Edenred SA and Roctool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edenred SA and Roctool
The main advantage of trading using opposite Edenred SA and Roctool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edenred SA position performs unexpectedly, Roctool 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 Roctool will offset losses from the drop in Roctool's long position.| Edenred SA vs. Bureau Veritas SA | Edenred SA vs. Sodexo SA | Edenred SA vs. Legrand SA | Edenred SA vs. Accor S A |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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