Correlation Between NYSE Composite and Sodexo PK
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Sodexo PK 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 NYSE Composite and Sodexo PK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Sodexo PK, you can compare the effects of market volatilities on NYSE Composite and Sodexo PK 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 NYSE Composite with a short position of Sodexo PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Sodexo PK.
Diversification Opportunities for NYSE Composite and Sodexo PK
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Sodexo is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Sodexo PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo PK and NYSE Composite 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 NYSE Composite are associated (or correlated) with Sodexo PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodexo PK has no effect on the direction of NYSE Composite i.e., NYSE Composite and Sodexo PK go up and down completely randomly.
Pair Corralation between NYSE Composite and Sodexo PK
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.36 times more return on investment than Sodexo PK. However, NYSE Composite is 2.76 times less risky than Sodexo PK. It trades about 0.32 of its potential returns per unit of risk. Sodexo PK is currently generating about -0.22 per unit of risk. If you would invest 1,909,542 in NYSE Composite on November 3, 2024 and sell it today you would earn a total of 90,340 from holding NYSE Composite or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Sodexo PK
Performance |
| Timeline |
NYSE Composite and Sodexo PK Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Sodexo PK
Pair trading matchups for Sodexo PK
Pair Trading with NYSE Composite and Sodexo PK
The main advantage of trading using opposite NYSE Composite and Sodexo PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Sodexo PK 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 PK will offset losses from the drop in Sodexo PK's long position.| NYSE Composite vs. Arrow Electronics | NYSE Composite vs. Cirmaker Technology | NYSE Composite vs. Zhihu Inc ADR | NYSE Composite vs. Weibo Corp |
| Sodexo PK vs. Alfa Laval AB | Sodexo PK vs. Randstad Holdings NV | Sodexo PK vs. Sandvik AB ADR | Sodexo PK vs. Sonova Holding AG |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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