Correlation Between Sodexo PK and Global Payments
Can any of the company-specific risk be diversified away by investing in both Sodexo PK and Global Payments 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 Sodexo PK and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sodexo PK and Global Payments, you can compare the effects of market volatilities on Sodexo PK and Global Payments 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 Sodexo PK with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo PK and Global Payments.
Diversification Opportunities for Sodexo PK and Global Payments
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sodexo and Global is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo PK and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and Sodexo PK 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 Sodexo PK are associated (or correlated) with Global Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments has no effect on the direction of Sodexo PK i.e., Sodexo PK and Global Payments go up and down completely randomly.
Pair Corralation between Sodexo PK and Global Payments
Assuming the 90 days horizon Sodexo PK is expected to under-perform the Global Payments. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sodexo PK is 1.93 times less risky than Global Payments. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Global Payments is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 10,176 in Global Payments on August 28, 2024 and sell it today you would earn a total of 1,570 from holding Global Payments or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sodexo PK vs. Global Payments
Performance |
| Timeline |
| Sodexo PK |
| Global Payments |
Sodexo PK and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo PK and Global Payments
The main advantage of trading using opposite Sodexo PK and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo PK position performs unexpectedly, Global Payments 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 Global Payments will offset losses from the drop in Global Payments' long position.| Sodexo PK vs. FitLife Brands, Common | Sodexo PK vs. HUMANA INC | Sodexo PK vs. SCOR PK | Sodexo PK vs. Aquagold International |
| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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