Correlation Between Edenred SA and Compagnie
Can any of the company-specific risk be diversified away by investing in both Edenred SA and Compagnie 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 Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edenred SA and Compagnie de lOdet, you can compare the effects of market volatilities on Edenred SA and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edenred SA and Compagnie.
Diversification Opportunities for Edenred SA and Compagnie
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Edenred and Compagnie is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Edenred SA and Compagnie de lOdet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de lOdet 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de lOdet has no effect on the direction of Edenred SA i.e., Edenred SA and Compagnie go up and down completely randomly.
Pair Corralation between Edenred SA and Compagnie
Assuming the 90 days trading horizon Edenred SA is expected to under-perform the Compagnie. In addition to that, Edenred SA is 1.35 times more volatile than Compagnie de lOdet. It trades about -0.05 of its total potential returns per unit of risk. Compagnie de lOdet is currently generating about 0.03 per unit of volatility. If you would invest 132,498 in Compagnie de lOdet on August 30, 2024 and sell it today you would earn a total of 21,502 from holding Compagnie de lOdet or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edenred SA vs. Compagnie de lOdet
Performance |
| Timeline |
| Edenred SA |
| Compagnie de lOdet |
Edenred SA and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edenred SA and Compagnie
The main advantage of trading using opposite Edenred SA and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edenred SA position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie'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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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